What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-01-08 compared with 2025-10-09 · 678 added, 242 removed, 688 unchanged (57% of the section changed)

3 unchanged sentences

(In thousands, except share and par value data)

August 31, 2025 May 31, 2025

November 30, 2025 May 31, 2025

Current assets:

1 unchanged sentence

Restricted cash

Funds for construction

Letters of credit

205,121 72,368

27 unchanged sentences

Temporary equity

Series E preferred stock, $ 0.001 par value, 2,000,000 shares authorized, 301,673 shares issued and outstanding at August 31, 2025, and 301,673 shares issued and outstanding at May 31, 2025

Series E-1 preferred stock, $ 0.001 par value, 62,500 shares authorized, 62,500 shares issued and 62,260 shares outstanding at August 31, 2025, and 62,500 shares issued and 62,485 shares outstanding at May 31, 2025

Series E preferred stock, $ 0.001 par value, 2,000,000 shares authorized, 301,673 shares issued and 281,673 shares outstanding at November 30, 2025, and 301,673 shares issued and outstanding at May 31, 2025

Series E-1 preferred stock, $ 0.001 par value, 62,500 shares authorized, 62,500 shares issued and 62,260 shares outstanding at November 30, 2025, and 62,500 shares issued and 62,485 shares outstanding at May 31, 2025

56,796 57,011

Series G preferred stock, $ 0.001 par value, 156,000 shares authorized, no shares issued and outstanding at August 31, 2025, and 78,000 shares issued and outstanding at May 31, 2025

Series G preferred stock, $ 0.001 par value, 1,030,000 shares authorized, 43,250 shares issued and outstanding at November 30, 2025, and 78,000 shares issued and outstanding at May 31, 2025

41,990 72,094

Redeemable noncontrolling interest

Stockholders' equity:

Common stock, $ 0.001 par value, 400,000,000 shares authorized, 278,584,101 shares issued and 269,292,902 shares outstanding at August 31, 2025, and 234,200,868 shares issued and 224,909,669 shares outstanding at May 31, 2025

Treasury stock, 9,291,199 shares at August 31, 2025 and 9,291,199 shares at May 31, 2025, at cost

Common stock, $ 0.001 par value, 600,000,000 shares authorized, 286,248,510 shares issued and 279,083,210 shares outstanding at November 30, 2025, and 234,200,868 shares issued and 224,909,669 shares outstanding at May 31, 2025

Treasury stock, 7,165,300 shares at November 30, 2025 and 9,291,199 shares at May 31, 2025, at cost

( 52,737 ) ( 31,400 )

8 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended

August 31, 2025 August 31, 2024

Three Months Ended Six Months Ended

November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024

Revenue $ 126,589 $ 36,163 $ 190,805 $ 69,086

5 unchanged sentences

56,993 25,974 86,145 36,966

Gain on classification of held for sale (2)

Loss (gain) on classification of held for sale (2)

— 192 — ( 24,616 )

Loss on abandonment of assets — 141 1,751 769

2 unchanged sentences

Interest expense, net 11,484 2,929 15,431 5,888

Gain on change in fair value of derivative

( 13,126 ) — ( 13,126 ) —

Gain on change in fair value of investment

( 2,767 ) — ( 2,767 ) —

Loss on conversion of debt — 25,410 — 33,612

Loss on change in fair value of debt — 87,218 — 85,439

Net (loss) income from continuing operations before income tax expense

Net loss from continuing operations before income tax expense

( 26,548 ) ( 128,362 ) ( 52,787 ) ( 112,450 )

Income tax expense 15 1 23 1

Net (loss) income from continuing operations ( 26,247 ) 15,912

Net loss from continuing operations ( 26,563 ) ( 128,363 ) ( 52,810 ) ( 112,451 )

Net (loss) income from discontinued operations 12,113 ( 10,363 ) 21,434 ( 30,522 )

9,321 ( 20,159 )

( 16,926 ) ( 4,247 )

Net loss ( 14,450 ) ( 138,726 ) ( 31,376 ) ( 142,973 )

Net loss attributable to noncontrolling interest ( 3,061 ) — ( 3,061 ) —

Preferred dividends ( 1,571 ) ( 629 ) ( 3,146 ) ( 673 )

Net loss attributable to common stockholders $ ( 19,082 ) $ ( 139,355 ) $ ( 37,583 ) $ ( 143,646 )

Net loss attributable to common stockholders

Net (loss) income attributable to common stockholders

Continuing operations $ ( 31,195 ) $ ( 128,992 ) $ ( 59,017 ) $ ( 113,124 )

6 unchanged sentences

Basic and diluted weighted average number of shares outstanding 277,423,733 209,560,339 266,599,490 179,119,398

(1) Includes related party selling, general and administrative expense of $ 0.1 million for each of the three months ended August 31, 2025 and August 31, 2024, respectively.

(1) Includes related party selling, general and administrative expense of $ 0.1 million for each of the three months ended November 30, 2025 and November 30, 2024, and for each of the six months ended November 30, 2025 and November 30, 2024, respectively.

See Note 6 - Related Party Transactions for further discussion of related party transactions.

(2) Includes $ 25 million received in connection with the sale of our Garden City facility once conditional approval requirements were met and escrowed funds were released during the three months ended August 31, 2024.

See accompanying notes to the unaudited condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders’ Equity (Unaudited)

For the Three Months ended August 31, 2025 and August 31, 2024

For the Three Months ended November 30, 2025

(In thousands, except share data)

Temporary Equity Permanent Equity

Preferred Stock Series E-1

Preferred Stock Series G

Preferred Stock Common Stock Treasury Stock Additional

Temporary Equity

Permanent Equity

Preferred Stock (1)

Redeemable Noncontrolling Interest

Common Stock Treasury Stock Additional

Paid in Capital

Stockholders’

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Balance, May 31, 2025 301,673 $ 6,932 62,485 $ 57,011 78,000 $ 72,094 234,200,868 $ 230 ( 9,291,199 ) $ ( 31,400 ) $ 1,009,913 $ ( 481,055 ) $ 497,688

Shares Amount Shares Amount Shares Amount

Balance, August 31, 2025 363,933 $ 63,728 $ — 278,584,101 $ 274 ( 9,291,199 ) $ ( 31,400 ) $ 1,573,367 $ ( 497,981 ) $ 1,044,260

Issuance of common stock from stock compensation plans — — — 739,197 1 — — ( 1 ) — —

1 unchanged sentence

Issuance of Preferred Stock, net of costs 424,050 407,807 — — — — — — — —

Conversion of Preferred Stock

( 380,800 ) ( 365,817 ) — 15,416,411 15 — — 365,802 — 365,817

Redemption of Preferred Stock

( 20,000 ) ( 500 ) — — — — — — — —

Preferred Stock dividends

— — — — — — — ( 1,571 ) — ( 1,571 )

Shares issued in offering, net of costs

— — — — — — — ( 4 ) — ( 4 )

Conversion of warrants — — — — — — 188 — — — 1 — 1

Issuance of warrants, at fair value, net of costs

— — — — — — — 34,217 — 34,217

Exercise of warrants

— — — 800,000 1 — — 6,263 — 6,264

Treasury Stock repurchase

— — — — — ( 7,165,300 ) ( 52,737 ) 52,737 — —

Treasury Stock retirement

— — — ( 9,291,199 ) ( 4 ) 9,291,199 31,400 ( 31,396 ) — —

Contributions from noncontrolling interest, net of costs

— — 513,911 — — — — — — —

Noncontrolling interest preferred stock dividends

— — 3,112 — — — — ( 3,112 ) — ( 3,112 )

Stock-based compensation — — — — — — — 29,127 — 29,127

Net loss — — ( 51 ) — — — — — ( 14,399 ) ( 14,399 )

Balance, November 30, 2025 387,183 $ 105,218 $ 516,972 286,248,510 $ 287 ( 7,165,300 ) $ ( 52,737 ) $ 2,014,459 $ ( 512,380 ) $ 1,449,629

(1) See Note 13 - Temporary Equity for further discussion of preferred stock activity.

See accompanying notes to the unaudited condensed consolidated financial statements

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders’ Equity (Unaudited)

For the Three Months ended November 30, 2024

(In thousands, except share data)

Temporary Equity

Permanent Equity

Preferred Stock (1)

Common Stock Treasury Stock Additional

Paid in Capital

Stockholders’

Shares Amount Shares Amount Shares Amount

Balance, August 31, 2024 354,864 $ 55,282 162,471,048 $ 162 ( 5,032,802 ) $ ( 62 ) $ 496,027 $ ( 254,281 ) $ 241,846

Shares issued in offering, net of costs — — 49,382,720 49 — — 149,768 — 149,817

Issuance of common stock from stock compensation plans — — 497,271 1 — — ( 1 ) — —

Conversions of debt — — 7,657,226 8 — — 48,736 — 48,744

Issuance of other common stock — — 528,541 1 — — ( 1 ) — —

Issuance of warrants, at fair value — — — — — — 7,636 — 7,636

Conversion of Series G — — — — ( 258,000 ) ( 242,480 ) 28,165,650 28 — — 242,452 — 242,480

Conversion of warrants

— — 3,853,605 4 — — ( 4 ) — —

Issuance of Preferred Stock, net of costs 6,359 5,850 — — — — ( 4,841 ) — ( 4,841 )

Conversion of Preferred Stock

( 10,191 ) ( 5,350 ) 1,455,857 1 — — 10,190 — 10,191

Preferred Stock Dividends — — — — — — ( 672 ) 44 ( 628 )

Preferred stock redemption — — ( 225 ) ( 225 ) — — — — — — — — —

Stock-based compensation — — — — — — 3,461 — 3,461

Share repurchase

— — — ( 4 ) ( 4,258,397 ) ( 31,338 ) — — ( 31,342 )

Purchase of capped call options

— — — — — — ( 51,750 ) — ( 51,750 )

Purchase of prepaid forward contract

— — — — — — ( 52,736 ) — ( 52,736 )

Reclass of debt conversion option

— — — — — — 252,900 — 252,900

Net loss — — — — — — — ( 138,726 ) ( 138,726 )

Balance, August 31, 2025 301,673 $ 6,932 62,260 $ 56,796 — $ — 278,584,101 $ 274 ( 9,291,199 ) $ ( 31,400 ) $ 1,573,367 $ ( 497,981 ) $ 1,044,260

Balance, November 30, 2024 351,032 $ 55,782 225,846,268 $ 222 ( 9,291,199 ) $ ( 31,400 ) $ 858,713 $ ( 392,963 ) $ 434,572

(1) See Note 13 - Temporary Equity for further discussion of preferred stock activity.

See accompanying notes to the unaudited condensed consolidated financial statements

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders’ Equity (Unaudited)

For the Six Months ended November 30, 2025

(In thousands, except share data)

Temporary Equity Permanent Equity

Preferred Stock Series F

Preferred Stock Common Stock Treasury Stock Additional

Preferred Stock (1)

Redeemable Noncontrolling Interest Common Stock Treasury Stock Additional

Paid in Capital

Stockholders’

Shares Amount Shares Amount Shares Amount Shares Amount

Shares Amount Shares Amount Shares Amount

Balance, May 31, 2025 442,158 $ 136,037 $ — 234,200,868 $ 230 ( 9,291,199 ) $ ( 31,400 ) $ 1,009,913 $ ( 481,055 ) $ 497,688

Shares issued in offering, net of costs — — — — 6,124,218 6 — — 31,015 — 31,021

Issuance of common stock from stock compensation plans — — — 1,636,219 2 — — ( 2 ) — —

Tax payments for restricted stock upon vesting — — — — — — — ( 15,467 ) — ( 15,467 )

Issuance of Preferred Stock, net of costs 604,050 578,203 — — — — — — — —

Conversion of Preferred Stock ( 638,800 ) ( 608,297 ) — 43,582,061 43 — — 608,254 — 608,297

Redemption of Preferred Stock ( 20,225 ) ( 725 ) — — — — — — — —

Preferred Stock dividends — — — — — — — ( 3,147 ) — ( 3,147 )

Shares issued in offering, net of costs — — — 15,320,373 15 — — 190,402 — 190,417

Issuance of warrants, at fair value, net of costs — — — — — — — 155,421 — 155,421

Exercise of warrants — — — 800,188 1 — — 6,264 — 6,265

Treasury Stock repurchase — — — — — ( 7,165,300 ) ( 52,737 ) 52,737 — —

Treasury Stock retirement — — — ( 9,291,199 ) ( 4 ) 9,291,199 31,400 ( 31,396 ) — —

Contributions from noncontrolling interest, net of costs — — 513,911 — — — — — — —

Noncontrolling interest preferred stock dividends — — 3,112 — — — — ( 3,112 ) — ( 3,112 )

Stock-based compensation — — — — — — — 44,592 — 44,592

Net loss — — ( 51 ) — — — — — ( 31,325 ) ( 31,325 )

Balance, November 30, 2025 387,183 $ 105,218 $ 516,972 286,248,510 $ 287 ( 7,165,300 ) $ ( 52,737 ) $ 2,014,459 $ ( 512,380 ) $ 1,449,629

(1) See Note 13 - Temporary Equity for further discussion of preferred stock activity.

See accompanying notes to the unaudited condensed consolidated financial statements

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders’ Equity (Unaudited)

For the Six Months ended November 30, 2024

(In thousands, except share data)

Temporary Equity Permanent Equity

Preferred Stock (1)

Common Stock Treasury Stock Additional

Paid in Capital

Stockholders’

Shares Amount Shares Amount Shares Amount

Balance, May 31, 2024 — $ — 144,083,944 $ 144 ( 5,032,802 ) $ ( 62 ) $ 374,738 $ ( 249,990 ) $ 124,830

Shares issued in offering, net of costs — — 55,506,938 55 — — 180,783 — 180,838

Issuance of common stock from stock plans — — 1,267,179 2 — — ( 2 ) — —

Conversions of debt — — 19,050,204 19 — — 104,926 — 104,945

Issuance of other common stock — — — — 100,000 — — — 519 — 519

Issuance of shares — — 628,541 1 — — 518 — 519

Issuance of warrants, at fair value — — — — — — 44,115 — 44,115

Conversion of warrants — — 3,853,605 4 — — ( 4 ) — —

Issuance of Preferred Stock, net of costs 361,223 61,132 — — — — ( 4,835 ) — ( 4,835 )

Preferred Stock Dividends — — — — — — ( 672 ) — ( 672 )

Conversion of preferred stock ( 10,191 ) ( 5,350 ) 1,455,857 1 — — 10,190 — 10,191

Stock-based compensation — — — — — — 542 — 542

Share repurchase — — — ( 4 ) ( 4,258,397 ) ( 31,338 ) — — ( 31,342 )

Purchase of capped call options — — — — — — ( 51,750 ) — ( 51,750 )

Purchase of prepaid forward contract — — — — — — ( 52,736 ) — ( 52,736 )

Reclass of conversion option — — — — — — 252,900 — 252,900

Net loss — — — — — — — ( 142,973 ) ( 142,973 )

Balance, August 31, 2024 301,673 $ 6,932 53,191 $ 48,350 162,471,048 $ 162 ( 5,032,802 ) $ ( 62 ) $ 496,027 $ ( 254,281 ) $ 241,846

Balance, November 30, 2024 351,032 $ 55,782 225,846,268 $ 222 ( 9,291,199 ) $ ( 31,400 ) $ 858,713 $ ( 392,963 ) $ 434,572

(1) See Note 13 - Temporary Equity for further discussion of preferred stock activity.

See accompanying notes to the unaudited condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands)

Three Months Ended

August 31, 2025 August 31, 2024

Six Months Ended

November 30, 2025 November 30, 2024

CASH FLOW FROM OPERATING ACTIVITIES

4 unchanged sentences

Lease expense 10,826 15,380

Gain on change in fair value of derivative ( 13,126 ) —

Gain on change in fair value of investment ( 2,767 ) —

Amortization of debt issuance costs 11,700 2,424

Gain on classification of held for sale

Loss on conversion of debt — 33,612

Loss on change in fair value of debt — 85,439

17 unchanged sentences

Finance lease prepayments

Investment in companies

( 17,000 ) ( 1,422 )

CASH FLOW USED IN INVESTING ACTIVITIES ( 818,490 ) ( 207,539 )

5 unchanged sentences

Tax payments for restricted stock upon vesting ( 15,467 ) —

Noncontrolling interest contributions 562,500 —

Noncontrolling interest issuance costs

Proceeds from issuance of common stock 196,366 191,590

4 unchanged sentences

Dividends issued on preferred stock ( 3,146 ) ( 672 )

Warrant issuance costs

Exercise of warrants

Proceeds from issuance of SAFE agreement included in long-term debt — 12,000

Repurchase of shares — ( 31,342 )

Proceeds from convertible notes — 450,000

Purchase of capped call options — ( 51,750 )

Purchase of prepaid forward contract — ( 52,736 )

CASH FLOW PROVIDED BY FINANCING ACTIVITIES 3,088,806 618,584

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH ( 9,207 ) 54,869

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands)

Six Months Ended

November 30, 2025 November 30, 2024

NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 2,172,448 282,891

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD, INCLUDING CASH FROM DISCONTINUED OPERATIONS

3 unchanged sentences

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH FROM CONTINUING OPERATIONS $ 2,295,764 $ 314,565

See accompanying notes to the unaudited condensed consolidated financial statements

Three Months Ended

August 31, 2025 August 31, 2024

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

5 unchanged sentences

Conversion of preferred stock to common stock $ 608,297 $ 10,191

Cashless exercise of warrants $ 1 $ 4

Issuance of warrants, at fair value $ 104,705 $ 44,115

Non-cash dividends paid in-kind

See accompanying notes to the unaudited condensed consolidated financial statements

1 unchanged sentence

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

For the Three and Six Months Ended November 30, 2025

Business and Organization

8 unchanged sentences

The unaudited condensed consolidated balance sheet as of May 31, 2025 has been derived from the audited consolidated financial statements as of that date, but does not include all disclosures required for audited annual financial statements.

The unaudited condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and entities that meet the definition of a variable interest entity (“VIE”) for which the Company is considered the primary beneficiary.

See Note 9 - Variable Interest Entity for further discussion.

In the Company’s opinion, all necessary adjustments have been made for the fair presentation of the results of the interim periods presented.

17 unchanged sentences

HPC Hosting Revenue

The Company provides certain fit-out services in accordance with the terms of the agreement with the client and recognizes revenues over time as performance obligations are satisfied.

The Company measures its progress to completion using an input measure of total costs incurred divided by total costs expected to be incurred, which it believes to be the best measure of progress towards completion of the performance obligation.

In the course of providing its services, the Company

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

routinely subcontracts for services and incurs other direct costs on behalf of its clients.

For the Three and Six Months Ended November 30, 2025

The Company provides certain fit-out services in accordance with the terms of the agreement with the client and recognizes revenues over time as performance obligations are satisfied.

In the course of providing its services, the Company routinely subcontracts for services and incurs other direct costs on behalf of its clients.

These costs are passed through to client and, in accordance with GAAP, are included in the Company’s revenue and cost of revenue.

During the quarter ended November 30, 2025, the Company began recognizing revenue associated with certain of its data center leases as accounted for under ASC 842.

See Note 14 - Leases for further information.

The Company has identified two reportable segments:

8 unchanged sentences

See Note 2 - Basis of Presentation and Significant Accounting Policies to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended May 31, 2025, as filed with the SEC, for additional information regarding the Company’s significant accounting policies and use of estimates.

Babcock & Wilcox Enterprises, Inc.

(“B&W”) Investment

The Company accounted for the warrants received from B&W under Accounting Standard Codification (“ASC”) 815 and concluded that the warrants met the definition of a derivative asset that needs to be fair valued at inception and each reporting period.

Corintis Investment

The Company accounted for the investment at cost under Accounting Standard Codification (“ASC”) 321, adjusted for impairment since the investment did not have a readily determinable fair value.

Variable Interest Entity

The Company consolidates a VIE where it has been determined that the Company is the primary beneficiary of the entity's operation in accordance with ASC Topic 810, Consolidations.

The primary beneficiary is the party that has both the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE.

In evaluating whether the Company is the primary beneficiary, the Company evaluates its power to direct the most significant activities of the VIE by considering the purpose and design of the entity and the risks the entity was designed to create and pass through to its

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

variable interest holders.

The Company also evaluates its economic interests in the VIE.

All intercompany amounts and transactions have been eliminated.

Redeemable Noncontrolling Interest

The Company determined for the noncontrolling interest, the initial amount presented in temporary equity should be the initial carrying amount of the noncontrolling interest pursuant to ASC 805-20-30.

Under ASC 805-20-30, noncontrolling interests are initially measured at fair value at the acquisition date.

However, as the noncontrolling interest has embedded features that require bifurcation, the fair value at issuance must be allocated between the components.

The Company initially measured the noncontrolling interest by first allocating the proceeds from the offering to the derivatives and, with the residual net proceeds allocated to the temporary equity classified noncontrolling interest and the warrants based on their respective relative fair values.

The Company will not subsequently remeasure the temporary equity classified noncontrolling interest until it is probable that the noncontrolling interest will become redeemable.

However, the noncontrolling interest balance will be adjusted for the attribution of net income or loss of the Subsidiary to the noncontrolling interest holder as prescribed by ASC 810.

Recent Accounting Pronouncements

In August 2023, the FASB issued ASU No.

2023-05, Business Combinations-Joint Venture Formations (Subtopic 805-60):

Recognition and Initial Measurement, which is intended to provide guidance for the formation of a joint venture, including the initial measurement of assets and liabilities, the formation date, and basis of accounting.

This new standard became effective for annual reporting periods beginning on or after January 1, 2025, with early adoption permitted.

The Company adopted the ASU with the execution of the Unit Purchase Agreement (as defined and described below).

In December 2023, the FASB issued ASU 2023-09, Income Taxes ("Topic 740"):

6 unchanged sentences

This ASU is intended to enhance transparency of income statement disclosures primarily through additional disaggregation of relevant expense captions.

The standard is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with prospective or retrospective application permitted.

In January 2025, the FASB issued ASU No.

2025-01, which revises the effective date of ASU No.

2024-03, to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

The ASU allows prospective or retrospective application.

The Company is currently evaluating the impact of this ASU on its financial statement presentation and disclosures and plans to adopt this pronouncement beginning with its fiscal year beginning June 1, 2027.

5 unchanged sentences

The Company is currently evaluating the impact of this ASU on its financial statements and plans to adopt this pronouncement beginning with its fiscal year beginning June 1, 2026.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

1 unchanged sentence

This ASU is intended to simplify the capitalization guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods.

The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted.

The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

The amendments in this update permit an entity to apply the new guidance using a prospective, retrospective or modified transition approach.

The Company is currently evaluating the impact of this ASU on its financial statements and plans to adopt this pronouncement beginning with its fiscal year beginning June 1, 2028.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) Narrow-Scope Improvements.

which is intended to improve the navigability of the guidance in ASC 270, Interim Reporting, and clarify when it applies.

Under the amendments, an entity is subject to ASC 270 if it provides interim financial statements and notes in accordance with GAAP.

ASU 2025-11 also addresses the form and content of such financial statements, interim disclosures requirements, and establishes a principle under which an entity must disclose events since the end of the last annual reporting period that have a material impact on the entity.

ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, and early adoption is permitted.

The Company is currently evaluating the impact of this ASU on its financial statements and plans to adopt this pronouncement beginning with its fiscal year beginning June 1, 2028.

Assets Held For Sale

13 unchanged sentences

Cash, Cash Equivalents, and Restricted Cash

The Company’s restricted cash balances consist of funds for construction and letters of credit.

The funds for construction are held in a construction reserve account to fund the construction of the Company’s 400 MW Ellendale, North Dakota data center campus (“Polaris Forge 1”), in accordance with the SMBC Credit Agreement (as defined below).

The Company’s restricted cash balances consist of debt service reserves and letters of credit.

The debt service reserves are held in separate accounts and are to be used to fund interest and principal on the Senior Secured Notes (as defined below) during construction.

See further discussion in Note 7 - Debt.

Additionally, the Company has letters of credit totaling $ 37.3 million presented on its unaudited condensed consolidated balance sheets within restricted cash.

Additionally, the Company has letters of credit totaling $ 23.5 million and $ 31.3 million, as of November 30, 2025 and May 31, 2025, respectively, presented on its unaudited condensed consolidated balance sheets within restricted cash.

The Company is required to keep these balances, which are held in money market funds, in separate accounts for the duration of the letter of credit agreements, which have terms of up to two years .

3 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

Cash, cash equivalents, and restricted cash within the unaudited condensed consolidated balance sheets that are included in the unaudited condensed consolidated statements of cash flows as of August 31, 2025 and May 31, 2025 were as follows (in thousands):

August 31, 2025 May 31, 2025

For the Three and Six Months Ended November 30, 2025

Cash, cash equivalents, and restricted cash within the unaudited condensed consolidated balance sheets that are included in the unaudited condensed consolidated statements of cash flows as of November 30, 2025 and May 31, 2025 were as follows (in thousands):

November 30, 2025 May 31, 2025

Cash and cash equivalents $ 1,913,436 $ 41,552

Restricted cash - funds for construction

Restricted cash - letters of credit

Restricted cash

205,121 72,368

2 unchanged sentences

Property and Equipment

Property and equipment consisted of the following as of August 31, 2025 and May 31, 2025 (in thousands):

Estimated Useful Life August 31,

Property and equipment consisted of the following as of November 30, 2025 and May 31, 2025 (in thousands):

Estimated Useful Life November 30,

Networking equipment, electrical equipment, and software

1 unchanged sentence

$ 37,177 $ 32,938

Electric generation and transformers 15 years 9,916 9,914

Mechanical infrastructure

20 years 71,868 —

Electrical infrastructure

15 years 103,485 —

Electric generation and transformers 15 years - 25 years

177,706 9,914

Land and building

Building 39 years 272,885 109,672

Building improvements

15 years - 25 years

Land 31,922 20,047

6 unchanged sentences

Property and equipment, net $ 2,001,450 $ 1,239,941

Depreciation expense totaled $ 2.7 million and $ 2.6 million for the three months ended August 31, 2025 and 2024, respectively .

Depreciation expense totaled $ 7.4 million and $ 10.1 million for the three and six months ended November 30, 2025, respectively, and $ 2.6 million and $ 5.2 million for the three and six months ended November 30, 2024, respectively.

Revenue from Contracts with Customers

Below is a summary of the Company’s revenue concentration by major customers for the three months ended August 31, 2025 and August 31, 2024, respectively.

Three Months Ended

August 31, 2025 August 31, 2024

Below is a summary of the Company’s revenue concentration by major customers for the three and six months ended November 30, 2025 and November 30, 2024, respectively.

Three Months Ended Six Months Ended

November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024

Customer A 67 % — % 58 % — %

2 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

For the Three and Six Months Ended November 30, 2025

Deferred Revenue

Changes in the Company's deferred revenue balances for the three months ended August 31, 2025 and August 31, 2024, respectively, are shown in the following table (in thousands):

Three Months Ended

August 31, 2025 August 31, 2024

Changes in the Company's deferred revenue balances for the six months ended November 30, 2025 and November 30, 2024, respectively, are shown in the following table (in thousands):

Six Months Ended

November 30, 2025 November 30, 2024

Balance, beginning of period $ — $ 8,188

4 unchanged sentences

Customer Deposits

Changes in the Company's customer deposits balances for the three months ended August 31, 2025 and August 31, 2024, respectively, are shown in the following table (in thousands):

Three Months Ended

August 31, 2025 August 31, 2024

Changes in the Company's customer deposits balances for the six months ended November 30, 2025 and November 30, 2024, respectively, are shown in the following table (in thousands):

Six Months Ended

November 30, 2025 November 30, 2024

Balance, beginning of period $ 16,125 $ 15,367

6 unchanged sentences

The potential sale of the Cloud Services Business represents a strategic shift in the Company’s operations and financial results.

As such, the Company reported the Cloud Services Business as discontinued operations for the three months ended August 31, 2025 in accordance with ASC 205-20, Discontinued Operations.

As such, the Company reported the Cloud Services Business as discontinued operations for the three and six months ended November 30, 2025 in accordance with ASC 205-20, Discontinued Operations.

The Company expects the sale of the Cloud Services Business to occur within 12 months from the date it met the held for sale criteria.

The financial results of the Cloud Services Business are presented as net loss from discontinued operations on the unaudited condensed consolidated statements of operations.

The following table presents the major components of the financial results of the Cloud Services Business for the periods presented (in thousands):

Three Months Ended

August 31, 2025 August 31, 2024

The following table presents the major components of the

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

financial results of the Cloud Services Business for the periods presented (in thousands):

Three Months Ended Six Months Ended

November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024

Revenue $ 18,402 $ 27,705 $ 35,120 $ 53,560

10 unchanged sentences

$ 12,113 $ ( 10,363 ) $ 21,434 $ ( 30,522 )

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

As of August 31, 2025, the assets and liabilities of the Cloud Services Business are classified as current in the unaudited condensed consolidated balance sheets, as it is probable that the sale will occur within one year.

As of November 30, 2025, the assets and liabilities of the Cloud Services Business are classified as current in the unaudited condensed consolidated balance sheets, as it is probable that the sale will occur within one year.

The following table represents the aggregated carrying amounts of classes of assets and liabilities that are classified as held for sale on the unaudited condensed consolidated balance sheets for the periods presented (in thousands):

August 31, 2025 May 31, 2025

November 30, 2025 May 31, 2025

Cash and cash equivalents $ 2 $ 2,398

14 unchanged sentences

Total current liabilities held for sale $ 161,318 $ 216,047

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

The following table presents significant non-cash items and capital expenditures of discontinued operations for the periods presented (in thousands):

Three Months Ended

August 31, 2025 August 31, 2024

Six Months Ended

November 30, 2025 November 30, 2024

Depreciation and amortization $ — $ 51,951

5 unchanged sentences

Property and equipment in AP and accrued liabilities $ — $ 1,931

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

Related Party Transactions

Related Party Revenue

The following table illustrates related party revenue for the three months ended August 31, 2025 and August 31, 2024 (in thousands):

Three Months Ended

August 31, 2025 August 31, 2024

Customer D* $ — $ 1,244

Customer E** $ — $ 682

Related party revenue consisted of revenue from two customers, Customer D and Customer E.

During the three months ended November 30, 2025 and 2024, there was no related party revenue.

Similarly, during the six months ended November 30, 2025, there was no related party revenue.

During the six months ended November 30, 2024, there was approximately $ 1.2 million of related party revenue from Customer D and approximately $ 0.7 million of related party revenue from Customer E.

Customer D is a subsidiary of an entity which, during the first quarter of fiscal year 2025, was deemed to beneficially own over 5 % of the Company's outstanding common stock.

3 unchanged sentences

Other Related Party Transactions

Related party transactions included within selling, general and administrative expense on the unaudited condensed consolidated statement of operations include software license fees of $ 0.1 million during each of the three months ended August 31, 2025 and August 31, 2024, respectively, were incurred with a company whose chairman is also a member of the Company’s Board of Directors.

Related party transactions included within selling, general and administrative expense on the unaudited condensed consolidated statement of operations include software license fees of $ 74,250 and $ 72,000 during the three months ended November 30, 2025 and 2024, respectively, and $ 148,500 and $ 142,875 during the six months ended November 30, 2025 and 2024, respectively, were incurred with a company whose chairman is also a member of the Company’s Board of Directors.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

The Company’s outstanding debt consisted of the following components (in thousands):

Interest Rate Maturity Date August 31, 2025 May 31, 2025

Interest Rate Maturity Date November 30, 2025 May 31, 2025

Senior Secured Notes

9.25 % December 2030

$ 2,350,000 $ —

Convertible Notes, senior unsecured (1)

2 unchanged sentences

SMBC Loan (2)

375,000 375,000

Starion Ellendale Loan (3)

11 unchanged sentences

Long-term debt, net $ 2,594,011 $ 677,825

(1) The net carrying amount of the Convertible Notes was $ 274.0 million and $ 273.3 million and the remaining unamortized deferred financing costs related to the issuance was $ 176.0 million and $ 176.7 million, each as of August 31, 2025 and May 31, 2025, respectively.

(2) The SMBC Loan is guaranteed by APLD HPC TopCo LLC, a wholly-owned subsidiary of the Company, and is secured by a continuing security interest in all of the membership interests of the borrower, APLD HPC Holdings LLC, including a mortgage on certain properties as defined in the collateral agency, security and depositary agreement.

The remaining unamortized deferred financing costs as of August 31, 2025 and May 31, 2025 were $ 3.4 million and $ 4.4 million, respectively.

The average SOFR plus the applicable margin for the three months ended August 31, 2025 and fiscal year ended May 31, 2025 was 8.07 % and 7.82 %, respectively.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

(1) The net carrying amount of the Convertible Notes was $ 274.6 million and $ 273.3 million and the remaining unamortized deferred financing costs related to the issuance was $ 175.4 million and $ 176.7 million, each as of November 30, 2025 and May 31, 2025, respectively.

(2) The SMBC Loan was guaranteed by APLD HPC TopCo LLC, a wholly-owned subsidiary of the Company, and was secured by a continuing security interest in all of the membership interests of the borrower, APLD HPC Holdings LLC, including a mortgage on certain properties as defined in the collateral agency, security and depositary agreement.

During the quarter ended November 30, 2025, concurrent with the closing of the Senior Secured Notes offering (see below), the Company repaid in full the aggregate principal balance plus accrued interest.

As of May 31, 2025, there were $ 4.4 million of unamortized deferred financing costs.

The average SOFR plus the applicable margin for the fiscal year ended May 31, 2025 was 7.82 %.

(3) The Starion Ellendale Loan is guaranteed by APLD ELN-01 LLC, a wholly-owned subsidiary of the Company, and is secured by a security interest in substantially all of the assets of the Ellendale Data Center Hosting facility (as defined in the Starion Ellendale Loan), and a security interest in the form of a collateral assignment of the Company’s rights and interests in all master hosting agreements related to APLD ELN-01 LLC.

2 unchanged sentences

The Starion Term Loan Agreement contains customary covenants, representations and warranties and events of default.

The Company is subject to a debt service coverage ratio and is in compliance as of August 31, 2025.

(6) Inclusive in this number is $ 12.0 million of proceeds from the issuance of two SAFE agreements which were accounted for as liabilities.

The Company is subject to a debt service coverage ratio and is in compliance as of November 30, 2025.

(6) Inclusive in this number is $ 12.0 million of proceeds from the issuance of two SAFE agreements which were accounted for as liabilities as well as two promissory notes the Company entered into during the three months ended November 30, 2025 for a total of approximately $ 19.5 million.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

Remaining Principal Payments

Below is a summary of the remaining principal payments due over the life of the term loans as of August 31, 2025 (in thousands):

Below is a summary of the remaining principal payments due over the life of the term loans as of November 30, 2025 (in thousands):

Thereafter (1)

2 unchanged sentences

Letters of Credit

As of August 31, 2025, the Company had letters of credit totaling $ 37.3 million.

As of November 30, 2025, the Company had letters of credit totaling $ 23.5 million.

The Company has restricted cash related to its letters of credit and is required to keep these balances in separate accounts for the duration of the letter of credit agreements.

The Company presents all restricted cash amounts with letter of credit terms of 12 months or less within the Restricted Cash caption within current assets and any amounts with related letter of credit terms of over 12 months in Other Assets.

Revolving Credit Facility

On November 10, 2025, the Company entered into a loan and security agreement with First National Bank of Omaha, pursuant to which the lender agreed to make one or more revolving loans, and issue letters of credit, from time to time to the Company in an aggregate principal amount of $ 65 million.

Amounts borrowed and repaid are available for future borrowing.

Interest accrues on the outstanding balance at a rate of SOFR plus 2.75 % per annum.

Additionally, there is an unused facility fee of 0.35 % per annum based on the daily average unused amount, payable quarterly in arrears at the end of each quarter.

The loan is secured by all of the Company’s (but none of its subsidiaries’) assets.

As of November 30, 2025, there have been no draws on the facility.

Promissory Note

On September 9, 2025, APLD FAR-01 LLC, a subsidiary of the Company, entered into a promissory note (the “Promissory Note”) with Macquarie Equipment Capital, Inc., a Delaware corporation (“MEC”).

The Promissory Note provided for an initial principal sum of $ 50 million (the “Loan”), which was drawn on the Closing Date.

The Loan bore interest at 8.0 % per annum.

From the Closing Date and for the succeeding twelve months (the “PIK Period”), accrued interest was to be paid in kind, with such payment in kind being capitalized to principal monthly and at such other times as specified in the Promissory Note.

After the PIK Period, accrued interest was to be paid in cash in certain circumstances.

The Promissory Note was to mature on the earliest of (i) the date of acceleration of the Loan, (ii) February 1, 2026, if the 200 MW Lease Execution (as defined therein) has not occurred on or before October 31, 2025, or (iii) September 9, 2027.

The Loan could be accelerated and the Company required to prepay the full outstanding principal balance of the Promissory Note, together with accrued interest to the date of prepayment on the principal amount prepaid and any other amounts then due and payable, upon the occurrence of any of the following conditions:

(a) a Change of Control (as defined therein), (b) within ninety (The Company may voluntarily prepay all or part of the Promissory Note at any time with no less than three ( 3 ) business days’ notice with accrued interest to the date of prepayment on the principal amount prepaid, so long as, with respect to the portion of the Loan then being prepaid, in each case, such prepayment is accompanied by the payment of amounts sufficient to achieve a rate of return that equals or exceeds 1.10 to 1.00.

The same 1.10 x return hurdle applied to repayment at maturity.

Amounts repaid under the Promissory Note are not available to be re-borrowed.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

For the Three and Six Months Ended November 30, 2025

Proceeds of the Loan under the Promissory Note were used, in part, to (i) pay transaction costs, (ii) pay transaction expenses in connection with the Note Documents (as defined therein), (iii) fund the purchase of the financed properties located on the Company’s campus in Harwood, ND (“Polaris Forge 2”), including all associated closing costs, title fees, and legal expenses, (iv) finance improvements to the Polaris Forge 2 properties, (v) fund the purchase of the Transformers (as defined therein) and other equipment expected to be installed and used for the improvements of the Polaris Forge 2 properties, (v) to pay any other costs, fees, expenses, or amounts related to or in connection with the development and construction of Polaris Forge 2, and (vi) for general corporate working capital purposes.

On November 28, 2025, the Company repaid the Promissory Note in full, including all outstanding and unpaid principal, accrued interest, and rate of return.

As a result, the accrued interest and rate of return on the Macquarie Promissory Note of $ 1.4 million was capitalized to CIP commensurate with the use of proceeds associated with construction.

Senior Secured Notes

On November 20, 2025, APLD ComputeCo LLC (“Issuer”), a subsidiary of the Company, completed a private offering of 9.25 % Senior Secured Notes due 2030 (the “Notes”).

The Notes were sold pursuant to the terms of a purchase agreement, dated as of November 13, 2025 and as amended thereafter, entered into by and among the Issuer, the subsidiary guarantors party thereto (the “Subsidiary Guarantors”) and Morgan Stanley & Co.

LLC as the representative (the “Representative”) of the several initial purchasers (the “Initial Purchasers”) in a Rule 144A/Regulation S offering.

The aggregate principal amount of Notes sold in the offering was $ 2.35 billion.

The Notes were issued at a price equal to 97 % of their aggregate principal amount.

The Issuer intends to use the net proceeds from the offering to fund a portion of the construction and associated expenses of its 100 MW and 150 MW data centers, ELN-02 and ELN-03, respectively (the “Facilities”), at the Company’s 400MW Ellendale, North Dakota campus (“Polaris Forge 1”), repay the aggregate principal balance plus any accrued and unpaid interest under the SMBC Loan, fund debt service reserves, and pay transaction expenses.

Also on November 20, 2025, the Issuer, APLD HPC Holdings 2 LLC (the direct parent of the Issuer) and the Subsidiary Guarantors entered into an indenture (the “Indenture”) with respect to the Notes with Wilmington Trust, National Association, as trustee (the “Trustee”) and collateral agent (the “Collateral Agent”).

The Notes are senior secured obligations of the Issuer and bear interest at a rate of 9.25 % per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2026.

The Notes will mature on December 15, 2030, unless earlier redeemed or repurchased in accordance with their terms.

The principal amount of the Notes will amortize on a semi-annual basis on June 15 and December 15 of each year, beginning on December 15, 2027, in amounts set forth in the Indenture.

Required amortization shall be subject to adjustment in case of partial redemption or repurchase or, in certain circumstances, the issuance of additional notes.

On or after December 15, 2027, the Issuer may redeem the Notes at its option, in whole at any time or in part from time to time, at the redemption prices set forth in the Indenture.

Prior to December 15, 2027, the Issuer may redeem the Notes at its option, in whole at any time or in part from time to time, at a redemption price equal to 100 % of the principal amount of the notes redeemed, plus a “make-whole” premium and accrued and unpaid interest, if any.

In addition, prior to December 15, 2027, the Issuer may redeem up to 40 % of the aggregate principal amount of the notes in an amount not to exceed the amount of the proceeds of certain equity offerings, at the redemption price set forth in the Indenture, plus accrued and unpaid interest.

The Indenture limits the ability of the Issuer and the Subsidiary Guarantors to, among other things:

(i) incur or guarantee additional indebtedness;

(ii) pay dividends or distributions on, or redeem or repurchase, capital stock and make other restricted payments;

(iii) make certain investments;

(iv) create or incur liens;

(v) consummate certain asset sales;

(vi) enter into sale and lease back transactions;

(vii) hold assets or conduct operations unrelated to the operation of the Facilities and certain additional projects;

(viii) engage in certain transactions with its affiliates;

and (ix) merge, consolidate or transfer or

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

sell all or substantially all of its assets.

These covenants are subject to a number of important qualifications and exceptions as set forth in the Indenture.

Additionally, upon the occurrence of specified change of control events, the Issuer must offer to repurchase the notes at 101 % of the principal amount, plus accrued and unpaid interest, if any, to, but excluding, the purchase date.

The Indenture also provides for customary events of default.

The Company will provide a customary completion guarantee with respect to each Project (as defined in the Indenture) related to the Facilities, which will require the Company to provide the Issuer funds as necessary to ensure the achievement of the applicable Commencement Date (as defined in the Indenture) under the respective datacenter lease in the event that the proceeds of the Notes and the available funds (including previous equity contributions from the Company) are insufficient to do so.

As of November 30, 2025, remaining unamortized deferred financing costs related to the issuance of the loan was $ 6.2 million.

Balance Sheet Components

Certain balance sheet components are as follows (in thousands):

August 31, 2025 May 31, 2025

November 30, 2025 May 31, 2025

Prepaid expenses and other current assets

6 unchanged sentences

$ 272,012 $ 9,430

August 31, 2025 May 31, 2025

November 30, 2025 May 31, 2025

Long term lease incentive

$ 203,346 $ 84,416

Restricted cash

177,207 7,000

Deposits on assets & construction

13,345 69,500

Deferred construction costs 26,151 33,600

Restricted cash:

letters of credit — 7,000

Deferred lease costs 12,558 8,811

Derivative assets (1)

Investments in other companies (2)

1 unchanged sentence

Total Other assets $ 508,389 $ 180,776

August 31, 2025 May 31, 2025

(1) Balance as of November 30, 2025 consists of the fair value of derivative assets related to the preferred units and corresponding common units held by APLD HPC TopCo 2’s noncontrolling interest.

See Note 13 - Temporary Equity for further discussion.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

(2) Balance as of November 30, 2025 includes two investments that occurred during the three months ended November 30, 2025:

Babcock & Wilcox Enterprises, Inc.

(“B&W”), a publicly traded company, and Corintis SA (“Corintis”), a private company.

On November 4, 2025, the Company and B&W entered into an agreement under which the Company contributed $ 2.0 million to B&W in exchange of 500,000 shares of B&W’s common stock and a warrant to purchase 2.6 million shares of common stock with an exercise price of $ 4.11 .

The warrant was determined to be a derivative asset and was required to be measured at fair value at issuance.

It will be remeasured at fair value at each reporting date with changes in fair value reported on the unaudited condensed consolidated statement of operations.

To allocate the contribution between the common stock and the warrant, the Company determined the fair value of each and utilized the relative fair value allocation method.

During the three months ended November 30, 2025, the Company recorded $ 2.8 million gain on change in fair value of investment and $ 13.1 million gain on change in fair value of derivatives on the unaudited condensed consolidated statement of operations.

On November 28, 2025, the Company invested in Corintis for approximately $ 15.0 million in exchange for Series A1 preferred shares.

The investment in Corintis will be carried at cost as it is an equity security without a readily determinable fair value and evaluated annually for impairment indicators.

November 30, 2025 May 31, 2025

Accrued liabilities

5 unchanged sentences

$ 207,454 $ 29,549

August 31, 2025 May 31, 2025

November 30, 2025 May 31, 2025

Other current liabilities

1 unchanged sentence

Total Other current liabilities $ 38,311 $ 19,432

Variable Interest Entity

Based upon the criteria set forth in ASC 810, Consolidation , the Company consolidates variable interest entities (“VIEs”) in which it has a controlling financial interest and is therefore deemed the primary beneficiary.

A controlling financial interest will have both of the following characteristics:

(a) the power to direct the VIE activities that most significantly impact economic performance;

and (b) the obligation to absorb the VIE losses and the right to receive benefits that are significant to the VIE.

As of November 30, 2025, the Company has determined that it was the primary beneficiary of one VIE, APLD HPC TopCo 2 LLC (“TopCo 2”), as it has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

Additionally, under the A&R UPA (as defined below), the Company is required to fund its portion of the equity to TopCo 2 for the applicable project at the rate of $ 750,000 per MW of capacity (less any equity capital previously invested in the project by the Company or any of its subsidiaries).

As previously disclosed, on January 13, 2025, APLD HPC Holdings LLC (formerly, APLD ELN-02 Holdings LLC), an indirect wholly owned subsidiary of the Company, entered into a Unit Purchase Agreement (the “UPA”) for its HPC Hosting Business with MIP VI HPC Holdings, LLC, an affiliate of Macquarie Asset Management (“MAM”).

On February 11, 2025, APLD HPC Holdings LLC novated and assigned its rights, title and interests and duties, liabilities and obligations under the UPA to APLD HPC TopCo LLC, an indirect wholly-owned subsidiary of the Company (“TopCo 1”).

On October 3, 2025, the Company, TopCo 1, APLD HPC TopCo 2 LLC, an indirect wholly-owned subsidiary of the

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

Company, and MIP HPC Holdings, LLC (formerly, MIP VI HPC Holdings, LLC) entered into an Amended and Restated Unit Purchase Agreement (the “A&R UPA”).

On October 6, 2025, TopCo 2, completed the initial closing under its A&R UPA, selling 112,500 preferred units for $ 112.5 million and issuing 75,000 common units representing 7.5 % of its fully diluted common equity.

In addition, pursuant to the A&R UPA, on October 6, 2025, the Company issued warrants to purchase an aggregate of 2.4 million shares of the Company’s common stock as described in Note 11 - Warrants .

On November 25, 2025, TopCo 2 completed a second closing under its A&R UPA, selling 450,000 preferred units for $ 450.0 million.

The issuance of the preferred units at closing resulted in a redeemable noncontrolling interest - see Note 13 - Temporary Equity for further discussion.

The purpose of TopCo 2 is to design, build and operate high-performance, sustainably engineered data centers and colocation services for artificial intelligence, cloud, and networking workloads in North Dakota.

TopCo 2 is a bankruptcy-remote legal entity with separate assets and liabilities.

The creditors of TopCo2 have recourse to the Company’s assets and general credits.

The following table presents the assets and liabilities held by TopCo 2 as of November 30, 2025, which are included in the unaudited condensed consolidated balance sheets (in thousands):

November 30, 2025

Cash and cash equivalents $ 1,639,558

Restricted cash

Accounts receivable 10,314

Prepaid expenses and other current assets 265,885

Property and equipment, net 1,831,519

Other assets 466,101

Accounts payable $ 75,980

Accrued liabilities 193,045

Current portion of debt

Current deferred revenue 29,339

Other current liabilities

Long-term debt

Total liabilities

Third-party equity ownership interests in APLD HPC TopCo 2 LLC represents a noncontrolling interest and is presented as temporary equity in the unaudited condensed consolidated balance sheets separate from the Company’s stockholders’ equity.

The amount of net income attributable to noncontrolling interests is disclosed in the unaudited condensed consolidated statement of operations.

Stockholders' Equity

1 unchanged sentence

On June 2, 2025, the Company entered into a Sales Agreement with Northland Securities, Inc.

and Wells Fargo Securities, LLC (the “June 2025 Sales Agreement”), pursuant to which, up to $ 200,000,000 of shares of the Company's common stock

and Wells Fargo Securities, LLC (the “June 2025 Sales Agreement”), pursuant to which, up to $ 200,000,000 of shares of the Company's common stock may be issued if and when sold.

As of the date of this report, the Company has issued and sold approximately 15.3 million shares under the June 2025 Sales Agreement for gross proceeds of approximately $ 196.4 million.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

may be issued if and when sold.

As of the date of this report, the Company has issued and sold approximately 15.3 million shares under the June 2025 Sales Agreement for gross proceeds of approximately $ 196.4 million.

A summary of warrant activity for the three months ended August 31, 2025 is presented below:

For the Three and Six Months Ended November 30, 2025

Increase In Authorized Shares

On November 5, 2025, at the Annual Stockholders’ Meeting, the Company’s stockholders approved an amendment to the Second Amended and Restated Articles of Incorporation, increasing the number of shares of common stock authorized for issuance thereunder to 600,000,000 shares, which became effective upon filing on November 6, 2025.

Treasury Stock

On October 7, 2025, the Board of Directors authorized and approved 9,291,199 shares of the Company’s capital stock that was currently held in treasury stock to be retired and returned to the authorized but unissued capital stock.

Settlement of Prepaid Forward Transaction

On November 3, 2025, the Company’s Prepaid Forward Transaction associated with the Convertible Notes matured and the Company received 7,165,300 shares of common stock which are now held in treasury stock as of November 30, 2025.

A summary of warrant activity for the six months ended November 30, 2025 is presented below:

Warrants Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (Years)

4 unchanged sentences

Exercised ( 800,300 ) 7.83 —

Outstanding at August 31, 2025

Outstanding at November 30, 2025

28,091,029 $ 8.61 8.31

2 unchanged sentences

1,500,000 AI Warrants have an exercise price of $ 10.00 per share of Common Stock and 1,500,000 AI Warrants have an exercise price of $ 7.50 per share of Common Stock.

As of August 31, 2025, all of the AI Warrants were outstanding.

As of November 30, 2025, all of the AI Warrants were outstanding.

Macquarie Warrants

1 unchanged sentence

The Macquarie Warrants are exercisable from and after the date that is six months following the date of issuance thereof and will have a five and one-half-year term and an exercise price of $ 9.66 per share, which exercise price must be paid in cash.

The Macquarie Warrants survived the termination of the Macquarie Promissory Note and remain outstanding as of August 31, 2025.

The Macquarie Warrants survived the termination of the Macquarie Promissory Note and remain outstanding as of November 30, 2025.

On February 27, 2025, the Company issued a warrant to STB Applied Holdings LLC to purchase 1,000,000 shares of the Company’s common stock at the exercise price of $ 7.83 per share (the “STB Warrant”) for consideration of $ 50,000 .

The warrant is exercisable beginning on February 27, 2027 (the “Initial Exercise Date”), upon payment of the applicable exercise price in cash or through cashless exercise for a period of five years from the Initial Exercise Date.

As of August 31, 2025, all of the STB Warrants were outstanding.

The warrant is exercisable upon payment of the applicable exercise price in cash or through cashless exercise for a period of five years from the Initial Exercise Date.

During the quarter ended November 30, 2025, 800,000 of the STB Warrants were exercised for $ 6.3 million.

CoreWeave Warrants

On May 28, 2025, in connection with the entry into the data center leases with CoreWeave (the "CoreWeave Leases"), the Company issued to CoreWeave a warrant (the “CoreWeave Warrant”) to acquire up to 13,062,521 shares of the Company's common stock at an exercise price of $ 7.19 per share, subject to adjustment in accordance with the terms and conditions set forth in the CoreWeave Warrant.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

common stock at an exercise price of $ 7.19 per share, subject to adjustment in accordance with the terms and conditions set forth in the CoreWeave Warrant.

The CoreWeave Warrant is exercisable upon issuance, upon payment of the applicable exercise price in cash or through cashless exercise for a period of 10 years.

During the quarter ended August 31, 2025, 300 warrant shares were exercised.

During the quarter ended November 30, 2025, 300 warrant shares were exercised.

Additionally, on August 28, 2025, in connection with the entry into the Building 4 Lease, the Company issued to CoreWeave a warrant (the “Building 4 Warrant”) to acquire up to 8,393,611 shares of the Company’s common stock at an exercise price of $ 10.75 per share, subject to adjustment in accordance with the terms and conditions set forth in the Building 4 Warrant.

The Building 4 Warrant is on the same Form of Warrant as the initial warrant issued to CoreWeave on May 28, 2025, in connection with the data center leases entered into for Building 2 and Building 3.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

The Building 4 Warrant was measured at fair value using the Black-Scholes Option Pricing model.

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The resulting fair value of the Building 4 Warrant was $ 14.44 per share, totaling $ 121.2 million, which was recorded to lease incentive asset and additional paid in capital on the Company's unaudited condensed consolidated balance sheets, and will be amortized over the life of the Building 4 Lease once it commences.

On October 6, 2025, in connection with the Amended and Restated Unit Purchase Agreement dated October 3, 2025 (the “Purchase Agreement”), the Company issued MIP VI REIT AIV, L.P.

and MIP VI DC REIT AIV, L.P.

two warrants (the “MAM Warrants”) to acquire up to 2,400,000 shares of the Company’s common stock at an exercise price of $ 8.29 per share, subject to adjustment in accordance with the terms and conditions set forth in the warrants.

The MAM Warrants were measured at fair value using the Black-Scholes Option Pricing model.

Inherent in pricing models are assumptions related to expected share-price volatility, contractual term, risk-free interest rate and dividend yield, which are considered Level 3 inputs.

The estimated fair value of the MAM Warrants are based on the following significant inputs:

Contractual term 5.5 years

Volatility 95 %

Risk-free rate 3.76 %

Dividend yield — %

The resulting fair value of the MAM Warrants was $ 24.47 per share, totaling $ 58.7 million.

The Company elected a relative fair value approach to record the warrants as part of the overall MAM transaction and as such, $ 34.2 million, net of issuance costs, was recorded as additional paid in capital on the Company's unaudited condensed consolidated balance sheets.

Stock-Based Compensation Plans

On October 8, 2024, the Company’s Board of Directors approved the Applied Digital Corporation 2024 Omnibus Equity Incentive Plan (the “2024 Plan”), which the Company’s stockholders approved on November 20, 2024.

The 2024 Plan provides for grants of various equity awards for eligible employees, officers, non-employee directors and other service providers.

The 2024 Plan provides for grants of various equity awards for eligible employees, officers, non-employee directors and other service

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

Upon stockholder approval of the 2024 Plan, the 2022 Plans (as defined below) were terminated;

provided that all awards (as defined in the 2022 Plans) outstanding under the 2022 Incentive Plan and the 2022 Non-Employee Director Stock Plan shall continue in effect in accordance with their terms.

On November 5, 2025, at the Annual Stockholders’ Meeting, the Company’s stockholders approved an amendment to the 2024 Plan to increase the number of shares of common stock authorized for issuance thereunder by 15,000,000 shares.

On October 9, 2021, the Company’s Board of Directors (the “Board”) approved two equity incentive plans, which the Company’s stockholders approved on January 20, 2022.

The two plans consist of the 2022 Incentive Plan, previously referred to in the Company’s SEC filings as the 2021 Incentive Plan (the “Incentive Plan”), which provides for grants of various equity awards to the Company’s employees and consultants, and the 2022 Non-Employee Director Stock Plan previously referred to in the Company’s SEC filings as the 2021 Non-Employee Director Stock Plan (the “Director Plan” and, together with the Incentive Plan, the “2022 Plans”), which provides for grants of restricted stock to non-employee directors and for deferral of cash and stock compensation if such deferral provisions are activated at a future date.

As of August 31, 2025, the Company had issued awards of approximately 23.2 million shares of common stock of the Company under the 2022 Plans, 7.8 million under the 2024 Plan, and 600,000 shares of common stock outside of either plan, related to an employment inducement award.

As of August 31, 2025, there are approximately 2.4 million shares of common stock available for issuance under the 2024 Plan .

As of November 30, 2025, the Company had issued awards of approximately 23.2 million shares of common stock of the Company under the 2022 Plans, 9.3 million under the 2024 Plan, and 600,000 shares of common stock outside of either plan, related to an employment inducement award.

As of November 30, 2025, there are approximately 16.0 million shares of common stock available for issuance under the 2024 Plan.

The Company capitalizes a portion of stock-based compensation costs for employees who work directly on construction and development of the Company's data centers.

The Company recognized stock-based compensation associated with the 2022 and 2024 Plans as follows (in thousands):

August 31, 2025 August 31, 2024

Three Months Ended Six Months Ended

November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024

Cost of revenue $ 777 $ 834 $ 1,468 $ 1,258

1 unchanged sentence

Capitalized (1)

999 152 1,928 306

Total stock-based compensation $ 29,050 $ 4,436 $ 44,425 $ 2,206

(1) Capitalized to CIP in the unaudited condensed consolidated balance sheets.

Restricted Stock Awards

As of May 31, 2025 and November 30, 2025, there were 271,444 shares outstanding with a weighted average grant date fair value per share of $ 3.55 as there were no restricted stock awards granted, vested, or forfeited during the six months ended November 30, 2025.

As of November 30, 2025, total remaining expense to be recognized related to these awards was $ 0.7 million and the weighted average remaining recognition period for the unvested awards was 1.4 years.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

Restricted Stock Awards

As of May 31, 2025 and August 31, 2025, there were 271,444 shares outstanding with a weighted average grant date fair value per share of $ 3.55 as there were no restricted stock awards granted, vested, or forfeited during the three months ended August 31, 2025.

As of August 31, 2025, total remaining expense to be recognized related to these awards was $ 0.8 million and the weighted average remaining recognition period for the unvested awards was 1.7 years.

For the Three and Six Months Ended November 30, 2025

Restricted Stock Units

The following is a summary of the activity and balances for unvested restricted stock units granted during the three months ended August 31, 2025:

The following is a summary of the activity and balances for unvested restricted stock units granted during the six months ended November 30, 2025:

Number of Shares Weighted Average Grant Date Fair Value Per Share

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Forfeited ( 159,557 ) 7.89

Outstanding as of August 31, 2025

Outstanding as of November 30, 2025

6,805,138 $ 10.93

As of August 31, 2025, total remaining expense to be recognized related to these awards was $ 56.5 million and the weighted average remaining recognition period for the unvested awards was 2.1 years.

As of November 30, 2025, total remaining expense to be recognized related to these awards was $ 66.1 million and the weighted average remaining recognition period for the unvested awards was 2.0 years.

Performance Stock Units

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The total compensation cost for the PSUs is determined based on the most likely outcome of the performance condition and the number of awards expected to vest.

As of May 31, 2025 and August 31, 2025, there were 7,207,500 performance stock units outstanding with a weighted average grant date fair value per share of $ 6.59 as there were no performance stock units granted, vested, or forfeited during the three months ended August 31, 2025.

As of August 31, 2025, total remaining expense to be recognized related to these awards was $ 29.8 million and the weighted average remaining recognition period for the unvested awards was 2.0 years.

The following is a summary of the activity and balances for unvested performance stock units granted during the six months ended November 30, 2025:

Number of Shares Weighted Average Grant Date Fair Value Per Share

Outstanding as of May 31, 2025

7,207,500 $ 6.59

Granted 635,000 26.00

Forfeited — —

Outstanding as of November 30, 2025

7,842,500 $ 8.16

As of November 30, 2025, total remaining expense to be recognized related to these awards was $ 34.3 million and the weighted average remaining recognition period for the unvested awards was 1.8 years.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

Temporary Equity

Preferred Stock

The following is a summary of the activity and balances for preferred stock during the three and six months ended November 30, 2024 (in thousands, other than share data):

Series E Redeemable Preferred Stock

Series F Convertible Preferred Stock

Series E-1 Redeemable Preferred Stock

Outstanding as of August 31, 2024

301,673 $ 6,932 53,191 $ 48,350 — $ —

Issuances, net of costs

— — — — 6,359 5,850

— — ( 10,191 ) ( 5,350 ) — —

Outstanding as of November 30, 2024

301,673 $ 6,932 43,000 $ 43,000 6,359 $ 5,850

Series E Redeemable Preferred Stock

Series F Convertible Preferred Stock

Series E-1 Redeemable Preferred Stock

Outstanding as of May 31, 2024

— $ — — $ — — $ —

Issuances, net of costs

301,673 6,932 53,191 48,350 6,359 5,850

— — ( 10,191 ) ( 5,350 ) — —

Outstanding as of November 30, 2024

301,673 $ 6,932 43,000 $ 43,000 6,359 $ 5,850

The following is a summary of the activity and balances for preferred stock during the three and six months ended November 30, 2025 (in thousands, other than share data):

Series E Redeemable Preferred Stock

Series E-1 Redeemable Preferred Stock

Series G Convertible Preferred Stock

Outstanding as of August 31, 2025

301,673 $ 6,932 62,260 $ 56,796 — $ —

Issuances, net of costs

— — — — 424,050 407,807

— — — — ( 380,800 ) ( 365,817 )

( 20,000 ) ( 500 ) — — — —

Outstanding as of November 30, 2025 281,673 $ 6,432 62,260 $ 56,796 43,250 $ 41,990

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

Series E Redeemable Preferred Stock

Series E-1 Redeemable Preferred Stock

Series G Convertible Preferred Stock

Outstanding as of May 31, 2025

301,673 $ 6,932 62,485 $ 57,011 78,000 $ 72,094

Issuances, net of costs

— — — 10 604,050 578,193

— — — — ( 638,800 ) ( 608,297 )

( 20,000 ) ( 500 ) ( 225 ) ( 225 ) — —

Outstanding as of November 30, 2025 281,673 $ 6,432 62,260 $ 56,796 43,250 $ 41,990

Series E Redeemable Preferred Stock

During the fiscal year ended May 31, 2025, the Company closed on four offerings of the Series E Redeemable Preferred Stock (the “Series E Preferred Stock”).

1 unchanged sentence

The Series E Preferred Stock offering was terminated on August 9, 2024.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

The shares of Series E Preferred Stock have no voting or conversion rights.

2 unchanged sentences

Dividends must be fully paid for all past periods before any distributions can be made to common stockholders or any junior series of equity securities.

During the three months ended August 31, 2025 and August 31, 2024, the Company declared and paid approximately $ 170,000 and $ 44,000 , respectively, of dividends related to Series E Preferred Stock as presented on the unaudited condensed consolidated statements of operations.

During the three and six months ended November 30, 2025, the Company declared and paid approximately $ 170,000 and $ 339,000 , respectively, of dividends related to Series E Preferred Stock as presented on the unaudited condensed consolidated statement of operations while during the three and six months ended November 30, 2024, approximately $ 226,000 and $ 270,000 , respectively, of dividends were declared and paid.

The Series E Preferred Stock ranks senior to all classes of common stock and junior to all existing and future debt of the Company.

11 unchanged sentences

If the Company elects to pay the redemption amount in shares, then the number of shares to be delivered will be calculated as the Company Optional Redemption Settlement Amount divided by the closing price per share of the common stock on the date of the Company Optional Redemption exercise, subject to the Share Cap.

During the three and six months ended November 30, 2025, 20,000 shares of Series E Preferred Stock were redeemed.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

Series E-1 Redeemable Preferred Stock

6 unchanged sentences

Dividends on the shares of Series E-1 Preferred Stock must be fully paid for all past periods before any distributions can be made to common stockholders or any junior series of equity securities.

During the three months ended August 31, 2025, the Company declared and paid approximately $ 1.4 million of dividends related to the Series E-1 Preferred Stock as presented on the unaudited condensed consolidated statements of operations.

During the three and six months ended November 30, 2025, the Company declared and paid approximately $ 1.4 million and $ 2.8 million, respectively of dividends related to the Series E-1 Preferred Stock as presented on the unaudited condensed consolidated statements of operations while during the three and six months ended November 30, 2024, approximately $ 48,000 of dividends were declared and paid.

The Series E-1 Preferred Stock ranks senior to all classes or series of common stock and junior to all existing and future debt of the Company.

Additionally, the Series E-1 Preferred Stock is on parity with the Series E Preferred Stock and any future series of preferred stock with substantially identical terms but may rank junior to any future series of preferred stock if the holders of such series are entitled to rights and preferences with priority over the holders of the Series E-1 Preferred Stock.

In the event of liquidation, holders of the Series E-1 Preferred Stock and holders of shares of any other class or

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

series of capital stock ranking senior to or on a parity with the Series E-1 Preferred Stock, are entitled to receive an amount per share equal to the Series E-1 Stated Value plus an amount per share that is issuable as a result of any accrued but unpaid dividends before any distributions are made to common stockholders.

In the event of liquidation, holders of the Series E-1 Preferred Stock and holders of shares of any other class or series of capital stock ranking senior to or on a parity with the Series E-1 Preferred Stock, are entitled to receive an amount per share equal to the Series E-1 Stated Value plus an amount per share that is issuable as a result of any accrued but unpaid dividends before any distributions are made to common stockholders.

The Series E-1 Preferred Stock has no stated maturity and remains outstanding indefinitely unless redeemed or repurchased by the Company.

9 unchanged sentences

If the Company elects to pay the redemption amount in shares, then the number of shares to be delivered will be calculated as the Settlement Amount divided by the closing price per share of the common stock on the last trading day prior to the date upon which notice was provided to the holder, subject to the Share Cap, if applicable.

During the three months ended August 31, 2025, 225 of shares were redeemed.

During the six months ended November 30, 2025, 225 of shares were redeemed.

Series G Convertible Preferred Stock

On April 30, 2025, the Company entered into the Preferred Equity Purchase Agreement (the “PEPA”) with certain investors for the issuance and sale of up to 156,000 shares of Series G Convertible Preferred Stock (the “Series G Preferred Stock”) in a transaction (the “Private Placement”) pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).

The shares of the Series G Preferred Stock may be put to the investors from time to time at the Company’s discretion during the period commencing on April 30, 2025 (the “Commitment Date”) and terminating on the earlier of (i) the 36-month anniversary of the Commitment Date or (ii) such date as there ceases to be a sufficient number of authorized but unissued shares of common stock remaining under the Exchange Cap (as defined in the PEPA).

The shares of the Series G Preferred Stock may be put to the investors from time to time at the Company’s discretion during the period commencing on April 30, 2025 (the

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

“Commitment Date”) and terminating on the earlier of (i) the 36-month anniversary of the Commitment Date or (ii) such date as there ceases to be a sufficient number of authorized but unissued shares of common stock remaining under the Exchange Cap (as defined in the PEPA).

The Series G Preferred Stock became convertible on June 3, 2025, the Registration Effective Date (as defined in the PEPA).

Pursuant to the PEPA, the Company filed a registration statement with the SEC, registering the resale of the shares of common stock issuable upon the conversion of the shares of Series G Preferred Stock, on June 3, 2025, as amended the post-effective amendment filed with the SEC on September 23, 2025, each of which was automatically effective upon filing.

Conversion of the Series G Preferred Stock is subject to a customary 4.99% beneficial ownership limitation, as well as a 19.99% conversion limitation pursuant to the applicable Nasdaq Listing Rules, representing 44,931,523 shares of the Company’s common stock (the “Exchange Cap”).

Conversion of the Series G Preferred Stock is subject to a customary 4.99 % beneficial ownership limitation, as well as a 19.99 % conversion limitation pursuant to the applicable Nasdaq Listing Rules (the “Exchange Cap”).

The Series G Preferred Stock ranks senior to all classes of common stock and junior to all existing and future debt of the Company.

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Holders have the right to require the Company to redeem the Series G Preferred Stock under certain conditions, such as a Trading Failure, as defined in the Series G Preferred Stock certificate of designation.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

delivers a Redemption Notice, multiplied by the number of shares of common stock into which the preferred stock is convertible at the then-effective conversion price.

If there is a Trading Failure, the redemption price is the greater of the Series G Preferred Stock stated value or the product of the lowest conversion price during the period beginning on the date immediately preceding the Trading Failure and ending on the date the holder delivers a Redemption Notice, multiplied by the number of shares of common stock into which the preferred stock is convertible at the then-effective conversion price.

If any Investor is prevented from converting any portion of its Series G Preferred Stock because of the Exchange Cap, and such limitation continues for 18 months following the date that is 18 months following the issuance of such Series G Preferred Stock, or, if earlier, the date that is 36 months following the Commitment Date, then the portion of the Series G Preferred Stock held by such Investor at such time shall be redeemed by the Company, within 10 trading days after such earlier date, at a price equal to 110 % of the stated value of such Series G Preferred Stock.

6 unchanged sentences

The Floor Price sets the minimum floor for the conversion price of the Series G Preferred Stock, which price may not be reduced unless the Company determines to do so in its discretion.

The First CoD Amendment further amended the status of converted or repurchased preferred stock such that any shares of Series G Preferred Stock that have been or will be converted will be retired and resume the status of authorized but unissued shares.

As Series G Preferred Stock may be reissued, during the three months ended August 31, 2025, the Company issued and sold 180,000 shares of Series G Preferred Stock for aggregate gross proceeds of $ 175.0 million, with a total of 258,000 shares of Series G Preferred Stock, inclusive of the 78,000 shares outstanding as of May 31, 2025, being converted into approximately 28.2 million shares of the Company’s common stock.

As of August 31, 2025, no Series G Preferred Stock was issued and outstanding.

The First CoD Amendment further amended the status of converted or repurchased preferred stock such that any shares of

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

Series G Preferred Stock that have been or will be converted will be retired and resume the status of authorized but unissued shares.

On September 11, 2025, the Company entered into the second amendment (the “Second Amendment”) to the PEPA, as amended by the First Amendment, dated August 14, 2025 to, among other things, increase the aggregate commitment amount of the shares of Series G Convertible Preferred Stock from $ 300 million to $ 450 million.

In connection with the Second Amendment, on September 11, 2025, the Company filed an amendment (the “Second CoD Amendment”) to the Series G Certificate of Designation, originally filed with the Secretary of State of the State of Nevada on April 30, 2025, as amended.

The Second CoD Amendment amended the Series G Certificate of Designation, as amended, to increase the number of shares authorized for issuance as Series G Preferred Stock from 156,000 to 204,000 shares.

On September 25, 2025, the Company filed an amendment (the “Third CoD Amendment”) to the Series G Certificate of Designation, originally filed with the Secretary of State of the State of Nevada on April 30, 2025, as amended.

The Third CoD Amendment amended the Series G Certificate of Designation, as amended, to increase the Floor Price (as set forth in Section 1.5(c)(i) of the Certificate of Designation) to $ 22.00 from $ 12.50 .

On October 7, 2025, the Company entered into the third amendment (the “Third Amendment”) to the PEPA to, among other things, increase the aggregate commitment amount of the shares of the Series G Preferred Stock from $ 450.0 million to $ 590.0 million.

In addition, on October 14, 2025, the Company filed a fourth amendment (the “Fourth CoD Amendment”) to the Series G Certificate of Designation, as amended.

The Fourth CoD Amendment amended the Series G Certificate of Designation, as amended, to increase the Floor Price (as set forth in Section 1.5(c)(i) of the Certificate of Designation) to $ 34.00 from $ 22.00 .

On October 21, 2025, the Company entered into the fourth amendment (the “Fourth Amendment”) to the PEPA to, among other things:

(i) increase the aggregate commitment amount of the shares of Series G Preferred Stock, from $ 590.0 million to $ 1.59 billion;

(ii) subject to waiver by a majority-in-interest of the investors, (a) set the maximum put issuance amount to $ 75.0 million per issuance, (b) set the limit to one put issuance per seven (7) business day period, and (c) set the maximum aggregate stated value of Series G Preferred Stock outstanding at any one time to $ 75.0 million;

(iii) increase the original discount from 2 % to 3 %;

(iv) eliminate the placement agent fee;

and (v) eliminate the prohibition on Variable Rate Transactions (as defined in the PEPA).

On October 21, 2025, in connection with the entry into the Fourth Amendment, the the Company filed an amendment (the “Fifth CoD Amendment”) to the Series G Certificate of Designation, originally filed with the Secretary of State of the State of Nevada on April 30, 2025, as amended on each of August 14, 2025, September 11, 2025, September 25, 2025 and October 14, 2025 (as amended, the “Certificate of Designations”).

The Fifth CoD Amendment amended the Certificate of Designations to, among other things, (i) increase the authorized shares of Series G Preferred Stock from 204,000 shares to 1,030,000 shares, and (ii) increase the limit below which the Floor Price (as defined in Section 1.5(c)(ii) of the Certificate of Designations) may not be reduced from $ 4.33 to $ 4.48 .

In addition, under the Fifth CoD Amendment, the Company’s Corporation’s Board of Directors may increase or decrease the applicable Floor Price with respect to any put, at its sole discretion.

As Series G Preferred Stock may be reissued, during the three and six months ended November 30, 2025, the Company issued and sold 424,050 and 604,050 shares of Series G Preferred Stock, respectively, for gross proceeds of $ 415.0 million and $ 590.0 million, respectively.

During the three and six months ended November 30, 2025, 380,800 and 638,800 shares of Series G Preferred Stock, respectively, were converted into 15.4 million and 43.6 million shares of the Company’s common stock, respectively.

As of November 30, 2025, 43,250 shares of Series G Preferred Stock were issued and outstanding.

Redeemable Noncontrolling Interest

APLD HPC TopCo 2 LLC

As discussed within Note 9 - Variable Interest Entity above, APLD HPC TopCo 2 LLC (“TopCo 2”) completed two closings under its A&R UPA during the quarter ended November 30, 2025, issuing 562,500 preferred units and 75,000

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

corresponding common units for $ 562.5 million to MIP HPC Holdings, LLC, which resulted in a redeemable noncontrolling interest.

The preferred units accrue dividends at a rate of 12.75 % per annum, which accrue daily and compound semi-annually, and which, if not redeemed by then, will increase by 87.5 basis points on each of October 7, 2030 and October 7, 2031, and by 200 basis points on October 7, 2035 and each one-year anniversary thereof, up to a maximum rate of 16.75 %.

The dividend rate will be further increased (i) by the amount that the weighted average all-in annual interest rate on certain indebtedness exceeds 8.75 % per annum for so long as such indebtedness is outstanding and (ii) for so long as certain significant events of default or other “trigger events” under the A&R LLCA remain uncured, by 200 basis points per annum.

Subject to limited exceptions, the dividends are payable (i) from the initial closing through October 6, 2035, at TopCo 2’s election, either in cash or in kind, and (ii) after October 6, 2035, in cash only.

Additionally, the preferred units carry a minimum 1.80 x multiple of invested capital liquidation preference, inclusive of the value of the common units;

provided, that (x) in connection with an initial public offering or a drag-along sale in which the sellers receive highly liquid securities, the minimum multiple of invested capital increases to 2.00 x and (y) with respect to any additional equity contributions with respect to the Polaris Forge 1 (other than pursuant to the additional closings under the A&R UPA), the then applicable minimum multiple of invested capital will be reduced by an amount that reflects the time between when MIP HPC Holdings, LLC first committed to make the investment and when the actual contribution is made, calculated as interest at a fixed annual rate of 12.75 %, accruing daily, on the amount of such additional equity contribution for such period.

The preferred units and the common units are redeemable after April 6, 2028, in exchange for:

(i) from April 6, 2028 up to October 6, 2029, the sum of (x) the applicable minimum multiple of invested capital, plus (y) 120 % of the fair market value of such common unit(s);

(ii) from October 6, 2029 up to October 6, 2030, the sum of (x) the applicable minimum multiple of invested capital, plus (y) 112.5 % of the fair market value of such common unit(s);

and (iii) from and after October 6, 2030, the greater of (x) the accreted amount, plus any accrued and unpaid dividend, plus the fair market value of such common units, plus certain indemnity payments by TopCo 2 for breaches of business representations of the TopCo 2 under the A&R UPA, if any, and (y) the applicable multiple of invested capital minus certain indemnity payments by the Company for breaches of fundamental representations of the Company under the A&R UPA (such greater amount, the “Liquidation Preference Amount”).

If the preferred units and common units are outstanding on October 6, 2032, or if certain trigger events occurs and are not cured within specified time periods, MIP HPC Holdings, LLC may require TopCo 2 to commence a customary marketed sale process managed by an independent investment bank, where the proceeds of any such sale are to be used to redeem the preferred units and the common units on the terms set forth above.

Distributions of available excess cash will be made in accordance with a multi-tiered waterfall, generally as follows:

(i) first, to MIP HPC Holdings, LLC, to pay certain specified losses under the A&R UPA, if any;

(ii) second, to MIP HPC Holdings, LLC, to pay any accrued but unpaid dividends on its preferred units;

(iii) third, to the MIP HPC Holdings, LLC, until it has received its Liquidation Preference Amount;

and (iv) fourth, to the holders of common units, pro rata in accordance with the number of common units held by them.

The preferred units and corresponding common units were determined to have embedded derivative features, the Redemption features and the Contingent Dividend Rate Increase feature, requiring bifurcation and remeasurement at fair value at each reporting date, with the changes in fair value recorded through earnings.

The Redemption features are inclusive of the Investor put option upon a Sale, APLD Holdings call option, and the Distribution Redemptions (all as defined within the A&R UPA).

The Company engaged a third party valuation specialist in determining the value of the embedded derivatives using a binomial lattice model, which includes Level 3 unobservable inputs.

The key inputs used were the estimated credit spread of the associated preferred stock and corresponding common units, volatility, and risk-free rate of the derivative assets.

As the noncontrolling interest has embedded features that require bifurcation, the fair value at issuance was allocated between the components.

As such, the net proceeds were first allocated to the derivatives at their

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

The remainder of the proceeds were then allocated to the warrants and noncontrolling interests based on their relative fair values.

As of November 30, 2025, the derivative assets were fair valued at $ 55.7 million.

The balance sheets and operating activities of TopCo 2 are included in the Company's unaudited condensed consolidated financial statements.

The Company adjusts net income in the unaudited condensed consolidated statements of operations to exclude the proportionate share of results that is attributable to the noncontrolling interest.

Additionally, the Company presents the proportionate share that is attributable to the noncontrolling interest as temporary equity within the unaudited condensed consolidated balance sheets.

This temporary equity presentation is the result of the noncontrolling interest being subject to certain redemption rights that are not entirely within the Company's control.

Due to these redemption rights, at each balance sheet date, the Company is required to adjust the carrying value of the derivatives to fair value and record any changes in fair value within earnings.

The Company will adjust noncontrolling interest for the attribution of net income (loss) and preferred dividends of TopCo 2 to the noncontrolling interest holder.

Net loss attributable to MIP HPC Holdings, LLC was $ 0.1 million for the three months ended November 30, 2025.

The proportionate share of net income was accounted for as a reduction in deriving net income attributable to common stock in the Company's unaudited condensed consolidated statements of operations.

The noncontrolling interest as measured at fair value was $ 517.0 million at November 30, 2025.

There was no noncontrolling interest at May 31, 2025.

The change in noncontrolling interest consists of $ 513.9 million of contributions from noncontrolling interest, net of costs, $ 3.1 million of preferred stock dividends paid in-kind, and $ 0.1 million in current year net loss attributable to non-controlling interest.

Lessor Accounting

1 unchanged sentence

(together, the "CoreWeave Leases") to deliver up to an aggregate of 250 MW of infrastructure to host CoreWeave’s HPC operations at Polaris Forge 1.

The first lease is for the full capacity of Building 2, our 100 MW data center that is currently under construction and expected to become operational during the calendar year 2025.

The first lease is for the full capacity of Building 2, our 100 MW data center, which was completed and became operational in November 2025.

The second lease is for the full capacity of Building 3, a 150 MW data center that is also under construction and is expected to become operational during the calendar year 2026.

1 unchanged sentence

The Company has guaranteed the obligations of APLD ELN-02 C LLC under the data center lease.

The third lease is for the full capacity of Building 4, which is currently in the design phase and is expected to be service-ready in middle of calendar year 2027.

On October 20, 2025, APLD FAR-01 LLC and APLD FAR-02 LLC, the Company’s subsidiaries, entered into a data center lease with a U.S.

based investment grade hyperscaler to deliver 200MW of critical IT load to support the hyperscaler’s AI and HPC infrastructure at Polaris Forge 2, which is currently under construction.

The initial 200 MW are phased within two buildings expected to begin to come online during the calendar year 2026.

A summary of minimum lease payments due from these leases is shown below.

These amounts do not reflect future rental revenues from renewal or replacement of existing leases unless the Company is reasonably certain it will exercise the

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

lease is for the full capacity of Building 4, which is currently in the design phase and is expected to be service-ready in middle of calendar year 2027.

A summary of minimum lease payments due from these leases is shown below.

These amounts do not reflect future rental revenues from renewal or replacement of existing leases unless the Company is reasonably certain it will exercise the option or the lessee has the sole ability to exercise the option.

For the Three and Six Months Ended November 30, 2025

option or the lessee has the sole ability to exercise the option.

Reimbursements of operating expenses and variable rent increases are excluded from the table below (in thousands):

8 unchanged sentences

Components of lease expense were as follows (in thousands):

Three Months Ended

August 31, 2025 August 31, 2024

Three Months Ended Six Months Ended

November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024

Operating lease cost:

4 unchanged sentences

Amortization of right-of-use assets (1)

5,570 2,091 6,528 3,570

Interest on lease liabilities 724 619 1,020 834

5 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

The following table represents the Company’s future minimum lease payments as of August 31, 2025:

For the Three and Six Months Ended November 30, 2025

The following table represents the Company’s future minimum lease payments as of November 30, 2025:

Operating Leases Finance Leases Total

8 unchanged sentences

Supplemental cash flow and other information related to leases is as follows:

Three Months Ended

August 31, 2025 August 31, 2024

Six Months Ended

November 30, 2025 November 30, 2024

Weighted-average years remaining (in years):

4 unchanged sentences

Finance leases 9.1 % 9.2 %

The Company has entered into leases which are executed but not yet commenced with total minimum payments of approximately $ 16.6 million.

The payments are for various leases with terms of 1.5 years to 2.0 years.

Commitments and Contingencies

Energy Contracts

As of August 31, 2025, the Company had a minimum commitment of approximately $ 40.1 million related to the energy services agreement for its Jamestown, North Dakota co-hosting facility payable over, approximately, the next 1.4 years.

As of November 30, 2025, the Company had a minimum commitment of approximately $ 33.1 million related to the energy services agreement for its Jamestown, North Dakota co-hosting facility payable over, approximately, the next 1.2 years.

Construction Contracts

7 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

For the Three and Six Months Ended November 30, 2025

Securities Lawsuit

24 unchanged sentences

If an unfavorable action were to occur, it is possible that the impact could be material to the Company’s results of operations in the period(s) in which any such outcome becomes probable and estimable.

As of August 31, 2025, there were no other pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s consolidated operations.

As of November 30, 2025, there were no other pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s consolidated operations.

There are also no legal proceedings in which any of the Company’s management or affiliates is an adverse party or has a material interest adverse to the Company’s interest.

5 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

For the Three and Six Months Ended November 30, 2025

available and evaluated regularly by the Chief Operating Decision Maker ("CODM"), which is the Company’s Chief Executive Officer.

4 unchanged sentences

Segment revenues and segment profit are regularly reviewed by the CODM and compared against historical results, forecast and budget information in order to make decisions about how to allocate capital and other resources to each segment.

The Company does not allocate loss on change in fair value of debt or income tax expense to these segments for internal reporting purposes, as the Company does not believe that allocating these expenses is beneficial in evaluating segment performance.

The Company does not allocate interest expense, net, gain on change in fair value of derivative, gain on change in fair value of investment, loss on conversion of debt, loss on change in fair value of debt or income tax expense to these segments for internal reporting purposes, as the Company does not believe that allocating these expenses is beneficial in evaluating segment performance.

The "Other" includes corporate related items not allocated to reportable segments for purposes of making operating decisions or assessing financial performance.

1 unchanged sentence

See "Note 5 - Discontinued Operations" for operations and segment results for the Cloud Services Business.

The following tables present segment information, including revenue by segment and segment profit (loss) for the three months ended August 31, 2025 and August 31, 2024 (in thousands):

Three Months Ended August 31, 2025

The following tables present segment information, including revenue by segment and segment profit (loss) for the three months ended November 30, 2025 and November 30, 2024 (in thousands):

Three Months Ended November 30, 2025 Six Months Ended November 30, 2025

Data Center Hosting Business

HPC Hosting Business

HPC Hosting Business Data Center Hosting Business HPC Hosting Business

Revenue $ 41,597 $ 84,992 $ 79,517 $ 111,288

4 unchanged sentences

Selling, general and administrative (1)

485 12,141 1,450 14,036

Loss on abandonment of assets

— — 512 1,239

Total costs and expenses 25,638 87,588 57,524 115,906

Segment profit (loss) $ 15,959 $ ( 2,596 ) $ 21,993 $ ( 4,618 )

Three Months Ended August 31, 2024

(1) Does not include selling, general and administrative expense that is not allocated to reportable segments, such as certain amounts of stock-based compensation, personnel expenses, and professional service expenses.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

Three Months Ended November 30, 2024 Six Months Ended November 30, 2024

Data Center Hosting Business

HPC Hosting Business

HPC Hosting Business Data Center Hosting Business HPC Hosting Business

Revenue $ 36,163 $ — $ 69,086 $ —

4 unchanged sentences

Selling, general and administrative (1)

795 5,813 1,567 8,740

Gain on classification of held for sale

192 — ( 24,616 ) —

Loss on abandonment of assets

1 unchanged sentence

Segment profit (loss) $ 12,549 $ ( 5,844 ) $ 48,400 $ ( 8,795 )

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

The following table presents a reconciliation to net (loss) income from continuing operations before income tax expense (in thousands):

The following tables presents reconciliation to net (loss) income from continuing operations before income tax expense (in thousands):

Three Months Ended

August 31, 2025 August 31, 2024

Six Months Ended

November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024

Segment profit

4 unchanged sentences

13,363 6,705 17,375 39,605

( 44,320 ) ( 19,510 ) ( 70,624 ) ( 27,116 )

Operating (loss) income

1 unchanged sentence

Interest expense, net 11,484 2,929 15,431 5,888

Gain on change in fair value of derivative

( 13,126 ) — ( 13,126 ) —

Gain on change in fair value of investment

( 2,767 ) — ( 2,767 ) —

Loss on conversion of debt — 25,410 — 33,612

Loss on change in fair value of debt — 87,218 — 85,439

2 unchanged sentences

(2) Other includes corporate related items not allocated to reportable segments.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

We also provide the following additional segment disclosures (in thousands):

Three Months Ended

August 31, 2025 August 31, 2024

Three Months Ended Six Months Ended

November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024

Depreciation and amortization:

2 unchanged sentences

HPC Hosting Business

4,715 1,353 5,413 2,074

524 61 587 124

Total depreciation and amortization (3)

3 unchanged sentences

Information on segment assets and a reconciliation to consolidated assets are as follows (in thousands):

August 31, 2025 May 31, 2025

November 30, 2025 May 31, 2025

Data Center Hosting Business

13 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

For the Three and Six Months Ended November 30, 2025

Potentially dilutive securities are excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive.

The table below shows the calculation for earnings per share:

Three Months Ended

August 31, 2025 August 31, 2024

Three Months Ended Six Months Ended

November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024

Net loss $ ( 14,450 ) $ ( 138,726 ) $ ( 31,376 ) $ ( 142,973 )

Net loss attributable to noncontrolling interest ( 3,061 ) — ( 3,061 ) —

Preferred dividends ( 1,571 ) ( 629 ) ( 3,146 ) ( 673 )

9 unchanged sentences

Basic and diluted weighted average number of shares outstanding 277,423,733 209,560,339 266,599,490 179,119,398

As of August 31, 2025 and August 31, 2024, the Company had approximately 14.6 million and 6.4 million shares, respectively, of granted but unvested restricted stock awards, performance stock units, and restricted stock units that would have a potentially dilutive effect on earnings per share.

As of August 31, 2025 and August 31, 2024, the Company had approximately 4.4 million and 9.7 million shares, respectively, associated with the Company’s preferred stock which have been excluded from the calculation of earnings per share because the effect of those shares would be antidilutive.

As of August 31, 2024, the Company had approximately 8.3 million shares associated with the Yorkville Convertible Debt which have been excluded from the calculation of earnings per share because the effect of those shares would be antidilutive.

Additionally, the Company had approximately 25.5 million and 12.3 million warrants outstanding as of August 31, 2025 and August 31, 2024, respectively, which have been excluded from the calculations of earnings per share because the effect of those shares would be antidilutive.

Lastly, if the Company's Convertible Notes were converted into shares of the Company's common stock as of August 31, 2025, approximately 46.1 million shares were excluded from the calculations of earnings per share because the effect of those shares would be antidilutive.

As of November 30, 2025 and November 30, 2024, the Company had approximately 14.9 million and 7.6 million shares, respectively, of granted but unvested restricted stock awards, performance stock units, and restricted stock units that would have a potentially dilutive effect on earnings per share.

As of November 30, 2025 and November 30, 2024, the Company had approximately 4.2 million and 7.5 million shares, respectively, associated with the Company’s preferred stock which have been excluded from the calculation of earnings per share because the effect of those shares would be antidilutive.

Additionally, the Company had approximately 28.1 million and 6.3 million warrants outstanding as of November 30, 2025 and November 30, 2024, respectively, which have been excluded from the calculations of earnings per share because the effect of those shares would be antidilutive.

Lastly, if the Company's Convertible Notes were converted into shares of the Company's common stock as of November 30, 2025, approximately 46.1 million shares were excluded from the calculations of earnings per share because the effect of those shares would be antidilutive.

Subsequent Events

Promissory Note

The Promissory Note provides for a principal sum of (a) $ 50 million (the “Initial Loan”), which was drawn on the Closing Date, plus (b) subject to the mutual consent of the Company and the Lender, additional loans in an aggregate principal amount not to exceed $ 25 million (the “Additional Loans” and together with the Initial Loan, the “Loan”).

The Loan shall bear interest at 8.0 % per annum, unless an Event of Default (as defined therein) has occurred and is continuing, in which case, the Secured Obligations (as defined therein) shall bear interest at the sum of 8.0 % per annum plus an additional 1.50 % per month (the “Post-Default Rate”).

From the Closing Date until the date that is twelve months following the Closing Date (the “PIK Period”), accrued interest will be paid in kind, with such payment in kind being capitalized to principal monthly and at such other times as may be specified in the Promissory Note.

After the PIK Period, accrued interest will be paid in cash, provided that (i) the Post-Default Rate interest is payable in cash on demand and (ii)

Additional Issuance under the A&R UPA

On December 9, 2025, the Subsidiary Issuer sold to the Purchaser an additional 337,500 Preferred Units in the Subsidiary Issuer at a price per Preferred Unit of $ 1,000 , for an aggregate purchase price of $ 337.5 million, bringing the total amount funded to date under the A&R UPA to $ 900.0 million.

DevCo Facility

On December 18, 2025 (the “Closing Date”), APLD DevCo LLC (the “Borrower”), a Delaware limited liability company and a subsidiary of the Company, entered into an ongoing credit arrangement with Macquarie Equipment Capital, Inc., a

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

accrued interest on any principal amount repaid or prepaid is payable on the date of such repayment or prepayment.

The Promissory Note matures on the earliest of (i) the date of acceleration of the Loan, (ii) February 1, 2026, if the 200 MW Lease Execution (as defined therein) has not occurred on or before October 31, 2025, or (iii) September 9, 2027.

The Loan will accelerate and the Company must mandatorily prepay the full outstanding principal balance of the Promissory Note, together with accrued interest to the date of prepayment on the principal amount prepaid and any other amounts then due and payable, upon the occurrence of any of the following conditions:

(a) a Change of Control (as defined therein), (b) within ninety ( 90 ) days following the occurrence of the 200 MW Lease Execution, and (c) within thirty ( 30 ) days following a Qualifying Preference Share Issuance (as defined therein).

The Company may voluntarily prepay all or part of the Promissory Note at any time with no less than three ( 3 ) business days’ notice with accrued interest to the date of prepayment on the principal amount prepaid, so long as, with respect to the portion of the Loan then being prepaid, in each case, such prepayment is accompanied by the payment of amounts sufficient to achieve a rate of return that equals or exceeds 1.10 to 1.00.

The same 1.10 x return hurdle applies to repayment at maturity.

Amounts repaid under the Promissory Note will not be available to be re-borrowed.

Proceeds of the Loan under the Promissory Note will be used, in part, to (i) pay transaction costs, (ii) pay transaction expenses in connection with the Note Documents (as defined therein), (iii) fund the purchase of the financed properties located on the Company’s campus in Harwood, ND (“Polaris Forge 2”), including all associated closing costs, title fees, and legal expenses, (iv) finance improvements to the Polaris Forge 2 properties, (v) fund the purchase of the Transformers (as defined therein) and other equipment expected to be installed and used for the improvements of the Polaris Forge 2 properties, (v) to pay any other costs, fees, expenses, or amounts related to or in connection with the development and construction of Polaris Forge 2, and (vi) for general corporate working capital purposes.

In connection with the Loan, (i) APLD FAR-01 LLC, APLD FAR Holdings LLC (“Intermediate Holdings”), a Delaware limited liability company, as parent of the APLD FAR-01 LLC, and APLD FAR-02 LLC (“FAR-02”), a Delaware limited liability company, as a subsidiary of Intermediate Holdings, have entered into a guarantee and collateral agreement, as grantors thereunder, in favor of the Lender (the “Guarantee and Collateral Agreement”) pursuant to which the APLD FAR-01 LLC, Intermediate Holdings, and FAR-02 pledged a continuing security interest in substantially all of their respective assets except for Excluded Assets (as defined in the Guarantee and Collateral Agreement) and (ii) the Company provided a guarantee (the “Parent Guarantee”) in favor of the Lender that includes certain covenants that limit the Company’s ability to (a) transfer or dispose of any Collateral (as defined in the Guarantee and Collateral Agreement) without the prior written consent of the Lender, (b) grant certain liens upon or with respect to the Collateral, and (c) allow APLD FAR-01 LLC and its subsidiaries to sell or otherwise transfer assets to their affiliates, subject to certain specified exceptions in each case.

APLD FAR-01 LLC will also grant mortgages to the Lender over certain properties.

Series G Preferred Stock Offering

On September 11, 2025, the Company entered into the second amendment (the “Second Amendment”) to the PEPA, dated April 30, 2025, by and between the Company and the investors signatory thereto, as amended by the First Amendment, dated August 14, 2025, in order to increase its access to capital to fund the continued construction and development of its Polaris Forge 1 data center campus in Ellendale, North Dakota and other general corporate purposes.

The Second Amendment amends the PEPA to, among other things, increase the aggregate commitment amount of the shares of Series G Convertible Preferred Stock from $ 300 million to $ 450 million.

For the Three and Six Months Ended November 30, 2025

Delaware corporation (the “Lender”), for the purposes of funding the initial sourcing, planning, development and construction costs associated with a new data center project (the “DevCo Facility”) and other potential projects.

The DevCo Facility is evidenced by, among other documents, a promissory note (the “Promissory Note”) executed by the Borrower in favor of the Lender.

The Promissory Note provides for a principal sum of (a) $ 45 million (the “First Draw”), which was drawn on the Closing Date, plus (b) $ 55 million (the “Second Draw,” and, together with the First Draw, each, a “Draw” and, collectively, the “Initial Loan”), to be funded upon the Borrower’s request at any time after the Closing Date subject to satisfaction of or waiver by the Lender of certain conditions precedent on or prior to the Second Draw, plus (c) the principal sum of any Additional Loans (as defined below, and, together with the Initial Loan, the “Loan”), if applicable, made by the Lender (at the mutual consent of the Borrower and the Lender).

In addition, the Promissory Note provides for, upon request of the Borrower occurring prior to the Maturity Date (as defined below), (a) rolling over of the outstanding principal balance of the Loan from time to time into one or more loans for one or more new projects (such rollovers, the “Rollover Loans”), or (b) increasing the size of the existing Loan by advancing new loans to the Borrower (such loans, the “Additional Loans”), in either case, for the purpose of financing development activities at new or existing data center projects at direct or indirect, wholly owned domestic subsidiaries of the Borrower, each of which shall become a guarantor with respect to such Additional Loans or Rollover Loans, as applicable, subject to the prior written approval of the Lender (in its sole discretion) and the satisfaction of the conditions specified by the Lender.

The First Draw is fully committed, but the Second Draw and any Additional Loans or Rollover Loans made by the Lender under the Promissory Note would be on an uncommitted, discretionary basis (with no specified maximum borrowing limit for any Additional Loans or Rollover Loans).

The Loan matures on the earliest of (i) the date of acceleration of the Loan, (ii) July 18, 2026, if the Initial Lease Execution (as defined therein) has not occurred on or before April 18, 2026, or (iii) December 18, 2027 (the “Maturity Date”).

Proceeds from the Loan will be used, in part, to (i) pay transaction expenses, and (ii) fund the purchase, development and improvement of, and the purchase of equipment for, the Company’s latest new project under development.

In connection with the Loan, (i) the Borrower, APLD Intermediate HoldCo LLC (“Intermediate Holdings”), a Delaware limited liability company, as parent of the Borrower, and the Borrower’s subsidiaries have entered into a guarantee and collateral agreement, as grantors thereunder, in favor of the Lender (the “Guarantee and Collateral Agreement”).

Cloud Services Business Update

On December 30, 2025, the Company announced it had entered into a non-binding term sheet for a proposed business combination of the Cloud Services Business, Applied Digital Cloud, with EKSO Bionics Holdings, Inc.

EKSO) (“EKSO”), which, once closed, will go forward as ChronoScale Corporation, an accelerated compute platform purpose-built to support AI workloads (the “Proposed Transaction”).

Upon closing of the Proposed Transaction, the Company expects to initially own over 80 % of the combined company, which will operate under the name ChronoScale.

The Applied Digital Cloud and EKSO businesses would continue to operate upon consummation of the Proposed Transaction.

The Proposed Transaction is subject to execution of final binding documents, completion of customary due diligence, customary regulatory and shareholder approvals, and satisfaction of closing conditions.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

Since the execution of the Second Amendment, 204,000 shares of Series G Preferred Stock have been issued for aggregate gross proceeds of $ 200.0 million, of which all 204,000 shares of Series G Preferred Stock have been converted into an aggregate of approximately 10.2 million shares of common stock.

On October 7, 2025, the Company entered into the third amendment (the “Third Amendment”) to the PEPA, dated April 30, 2025, by and between the Company and the investors signatory thereto, as amended by the First Amendment and the Second Amendment, in order to increase its access to capital to fund the continued construction and development of its Polaris Forge I data center in Ellendale, North Dakota.

The Third Amendment amends the PEPA to, among other things, increase the aggregate commitment amount of the shares of the Series G Preferred Stock from $ 450.0 million to $ 590.0 million.

Amended and Restated Unit Purchase Agreement

As previously disclosed, on January 13, 2025, APLD HPC Holdings LLC (formerly, APLD ELN-02 Holdings LLC), an indirect wholly owned subsidiary of the Company, entered into a Unit Purchase Agreement (the “Unit Purchase Agreement” or “UPA”) for its HPC Hosting Business with MIP VI HPC Holdings, LLC, which is an affiliate of funds and investment vehicles managed by entities within Macquarie Asset Management (“MAM”).

On February 11, 2025, APLD ELN-02 Holdings LLC novated and assigned its rights, title and interests and duties, liabilities and obligations under the UPA to APLD HPC TopCo LLC, an indirect wholly-owned subsidiary of the Company (“TopCo 1”).

On October 3, 2025, the Company, TopCo 1, APLD HPC TopCo 2 LLC, an indirect wholly-owned subsidiary of the Company (the “Subsidiary Issuer”), and MIP HPC Holdings, LLC (formerly, MIP VI HPC Holdings, LLC) (the “Purchaser”) entered into an Amended and Restated Unit Purchase Agreement (the “A&R UPA”).

On October 6, 2025, all conditions to the Initial Closing (as defined in the A&R UPA) were satisfied and the Initial Closing occurred.

At the Initial Closing, the Subsidiary Issuer sold to the Purchaser 112,500 Preferred Units in the Subsidiary Issuer at a price per Preferred Unit of $ 1,000 , for an aggregate purchase price of $ 112.5 million, and for no additional consideration, the Subsidiary Issuer agreed to issue to the Purchaser such number of Common Units of the Subsidiary Issuer representing, in the aggregate, seven and a half percent ( 7.5 %) of the fully diluted common equity of the Subsidiary Issuer as of immediately following the Initial Closing.

The proceeds of the Initial Closing will be used to pay, among other things, construction and development costs of Polaris Forge 1 and transaction expenses.

MAM has the right to invest up to an additional $ 4.9 billion under the A&R UPA.

In addition, pursuant to the A&R UPA, on October 6, 2025, the Company issued to the designated affiliates of the Purchaser, warrants to purchase an aggregate of 2.4 million shares of the Company’s common stock.

The warrants will become exercisable upon the Purchaser funding the full $ 450 million in Polaris Forge 1.

Also on October 6, 2025, the Company entered into a registration rights agreement with the Purchaser, pursuant to which the Company agreed to file with the SEC a registration statement registering the resale of the shares of common stock issuable upon exercise of the warrants within 60 days of the execution of the registration rights agreement.

For the Three and Six Months Ended November 30, 2025

Cummins Award

On January 6, 2026 (the “Grant Date”), the Board of Directors (the “Board”) of the Company, based on the recommendation of the Compensation Committee of the Board (the “Compensation Committee”), unanimously approved the grant of 4,500,000 performance stock units (“PSUs”) and 1,500,000 restricted stock units (the “RSUs”) to Wes Cummins, Chairman and Chief Executive Officer of the Company, under the Company’s 2024 Omnibus Equity Incentive Plan (as amended from time to time, the “Plan”).

Each PSU and RSU represents a right to receive one share of the Company’s common stock upon vesting, subject to the terms and conditions described below.

These awards are intended to be in lieu of any future equity awards to Mr.

Cummins for the next five years (unless there are unexpected changes in the Company’s business or other unforeseen factors that the Board or the Compensation Committee determines would make it in the best interests of the Company and its stockholders to grant additional equity award(s) to Mr.

Cummins), are structured to further align Mr.

Cummins’ total compensation with the Company’s continued growth and would (in the case of the PSUs) require significant value creation for the Company’s stockholders before any value from the grant can be realized by Mr.

The RSUs are subject to vesting as follows:

300,000 of the RSUs shall vest on the one-year anniversary of the Grant Date (the “Cliff Date”), and the remainder will vest in equal installments of 150,000 every six months after the Cliff Date, such that the RSUs will be fully vested on the five-year anniversary of the Grant Date.

The PSUs are eligible to vest based on the achievement of stock price hurdles, measured based on the Company’s average closing price per share over a 90 consecutive calendar day period (the “Average Closing Price”), as set forth in the table below.

The PSUs will only be earned and vest if the Average Closing Price equals or exceeds the applicable stock price hurdle on a date that is on or before the five-year anniversary of the Grant Date, subject to Mr.

Cummins’ continued full-time employment with the Company in a role approved by the Board on the applicable vesting date.

Shares of common stock issued with respect to the PSUs may not be transferred for two years from the date of issuance, other than shares withheld in respect of tax withholding obligations, or shares transferred by Mr.

Cummins for estate planning purposes.

Company Average Closing Price PSUs Eligible to Vest

100 1,500,000

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements